Uganda PDF

Document of
The International Fund for Agricultural Development
REPUBLIC OF UGANDA
VEGETABLE OIL DEVELOPMENT PROJECT, PHASE 2
(VODP2)
PROJECT DESIGN REPORT
VOLUME 1 MAIN REPORT AND APPENDICES
Eastern and Southern Africa Division

Programme Management Department, IFAD
IFAD Web Draft Post-Negotiations

9 March 2010
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties. Its contents may not otherwise be disclosed without
the authorisation of the International Fund for Agricultural Development (IFAD).
PROJECT DESIGN DOCUMENT
IFAD Project Design Team

Ides de Willebois
Director, Eastern & Southern Africa Division
Marian Bradley
Country Programme Manager (CPM)
Pontian Muhwezi
Country Office (Kampala)
Helen Gillian
IFAD Knowledge Management Officer
Deborah Martin
Programme Assistant
External Consultants
David Young
Billy Ghansah
Clive Drew
Clare Bishop-Sambrook
Mzee Shakib Mbabaali
Rachael Percy
Davis Atugonza
Godfrey Wanjohi
James Ssemwanga
Peder Nors
Markus Rosenberger
Ben Onyango
Abdi Maalim
Federica Iachetti
Agricultural Economist
Oil Palm Expert
Oilseeds Specialist
Targeting and Gender Specialist
Commodity Specialist
Socio-Economist and Extension Specialist
Financial Analyst
Financial Management Expert
Private Sector and Farmer Organisations Specialist
Ferry Specialist
Communications and Marketing Consultant
Project Management Specialist
Community Development Specialist
Financial Analyst
Ugandan Team
Connie Masaba
Peter Abong
Robert Khaukha
Zakayo Muyaka
Nelsen Basaalidde
VODP Project Coordinator

VODP Technical Officer
VODP M&E Officer
VODP Technical Officer
KOPGT Manager
Uganda: Vegetable Oil Development Project, Phase 2

Project Design Document
Main Report
TABLE OF CONTENTS
CURRENCY EQUIVALENTS
ABBREVIATIONS AND ACRONYMS
MAPS
EXECUTIVE SUMMARY
ii
iii
v
xi
I. INTRODUCTION
II. STRATEGIC CONTEXT

A. The Rural Development Context
B. Policy and Institutional Framework
C. IFAD Country Programme
2
2
2
4
III. POVERTY AND SOCIAL CAPITAL
IV. LESSONS LEARNED

A. Findings of the Interim Evaluation
B. Other Lessons Learned
6
6
7
V. THE PROJECT
A. Rationale for the Second Phase
B. Geographical Scope of the Project
C. Target Groups
D. Targeting Strategy and Gender Mainstreaming
E. Project Objectives and Outcomes
F. Project Components
8
8
10
11
13
14
14
VI. IMPLEMENTATION ARRANGEMENTS

A. Organizational Arrangements and Project Management
B. Transition and Start-up
C. Phasing of Project Implementation
D. The Collaborative Framework and Operational Partnerships
E. Results-Based M&E
24
24
26
27
28
29
VII. PROJECT BENEFITS, COSTS AND FINANCING

A. Benefit Analysis and Impact
B. Summary Costs
30
30
32
VIII. PROJECT RISKS AND SUSTAINABILITY

A. Risk Analysis
B. Exit Strategy and Post Project Sustainability
C. Innovative Features
D. Project Knowledge Products and Learning Processes
E. Regional Knowledge Networking
36
36
38
38
39
39
List of Tables
Table
Table
Table
Table
Table
Table
1.
2.
3.
4.
5.
6.
Area Targets for Oil Palm Development

Area Targets for Oilseeds Development
Project Cost Summary
Expenditure Account by Financiers
Procurement Methods to be used for IFAD funding
Risk Analysis

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Main Report Appendices

1.
2.
3.
4.
5.
List of Persons Met

Project Life File
Achievements and Lessons Learned (PCO, VODP)
Key Files
Logical Framework, Implementation Matrix and Organization Chart
Working Papers (Volume 2)

1.
2.
3.
4.
5.
6.
7.
8.
National Policy and Institutional Framework

Poverty and its Principal Determinants in Uganda
Vegetable Oil Market Overview
Oil Palm Development
Oilseeds Development
Environmental and Social Review Note
Project Implementation
Project Costs
CURRENCY EQUIVALENTS
Currency Unit = Ugandan Shilling (UGX)
USD 1.00 = UGX 2,000
WEIGHTS AND MEASURES
(International Metric System, unless specified in text)
1 acre = 0.04 hectare (ha)
1 ha = 2.4 acres
1 metric tonne = 1 000 kg
FISCAL YEAR
1st July to 30th June
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ABBREVIATIONS AND ACRONYMS

AWPB
BOPGA
BOPGT
CPO
COREC
Danida
DSIP
ESIA
FFBs
PFS
GAP
GoU
HDI
HIV/AIDS
IMS
KDLG
KOPGA
KOPGT
MAAIF
MFPED
MoLG
MOU
MTTI
NAADS
NARO
NaCCRI
NaSARRI
NEMA
NSCS
OPUL
OPV
OSSUP
PMU
PEAP
PMA
PPM&E
PPP
RFSP
RIMS
RSPO
SNV
UNBS
USAID
VODC
VODP
VODP2
Annual Work Plan and Budget

Buvuma Oil Palm Growers Association
Buvuma Oil Palm Growers Trust
Crude Palm Oil
Coffee Research Centre (responsible oil palm)
Danish International Development Agency
Development Strategy and Investment Plan (of MAAIF)
Environmental and Social Impact Assessment
Fresh Fruit Bunches
Pay-for-Service
Group Action Plans
Government of Uganda
Human Development Index
Human immunodeficiency virus/Acquired immune deficiency syndrome
Impact Monitoring System
Kalangala District Local Government
Kalangala Oil Palm Growers Association
Kalangala Oil Palm Growers Trust
Ministry of Agriculture, Animal Industry and Fisheries
Ministry of Finance, Planning and Economic Development
Ministry of Local Government
Memorandum of Understanding
Ministry of Tourism, Trade and Industry
National Agricultural Advisory Service
National Agricultural Research Organization
National Crops Resources Research Institute (responsible soybean)
National Semi-arid Resources Research Institute (responsible oilseeds)
National Environmental Management Authority
National Seed Certification Service
Oil Palm Uganda Ltd
Open pollinated variety
Oilseed Sub-sector Stakeholder Platform
Project Management Unit
Poverty Eradication Action Plan
Plan for Modernisation of Agriculture
Participatory Planning, Monitoring and Evaluation
Public-Private Partnership
Rural Financial Services Programme
Results Impact Monitoring System
Round Table on Sustainable Palm Oil
Netherlands Development Organisation
Uganda National Bureau of Standards
United States Agency for International Development
Vegetable Oil Development Council
Vegetable Oil Development Project
Vegetable Oil Sub-Sector Support Project, Phase 2
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EXECUTIVE SUMMARY
VEGETABLE OIL DEVELOPMENT PROJECT, PHASE 2
Rationale: Compared to a global average consumption of oils and fats of 22.4
kg/year/person, Uganda reached 5.6 kg/year/person in 2008, up from 3.9
kg/year/person in 2000. Uganda continues to import about 60-70% of its edible oil and
soap needs, as do most of the neighboring countries in East Africa. Population growth
and rising incomes will continue to fuel an annual growth rate of 9% in domestic and
regional demand for vegetable oil and its by-products for the foreseeable future.
GoU has been working to increase national production of vegetable oil crops, to promote
investment in processing and to use the countrys production potential to reduce national
imports of vegetable oil. In the mid 1990s, there was one large scale miller operating in
the country, importing crude palm oil (CPO) for refining as well as refining oil from
domestically produced crops, principally sunflower. IFAD approved the Vegetable Oil
Development Project (VODP) in April 1997, which aimed to introduce oil palm cultivation
in Uganda and extended sunflower production in the north and east. In 2000 GoU signed
an agreement with a private sector operator to develop commercial and smallholder oil
palm plantations in Kalangala District, thus introducing a second large-scale miller for
processing CPO and creating competition in this part of the industry.
The partnership with the private-sector operator to promote oil palm plantations also
created one of the largest public-private partnerships (PPP) in the country, and includes a
unique partnership for smallholder development financed by IFAD. VODP has also
supported farmers groups to grow and process sunflower, which has contributed to
oilseeds now being selected as one of the nine strategic crops for the country. GoU has
also worked with USAID and Danida, which have worked directly with farmers groups,
including those under NAADS, and financed a number of activities focused on promoting
field level PPPs between farmers groups and millers to increase the supply of oilseed
crushing material. In 2007, GoU reached agreement with another large-scale foreign
private-sector operator to establish a mill and solvent extraction plant in Lira.
The estimated national capacity for refining vegetable oil is about 1 000 tons/day. Of
this, palm oil accounts for about 450 tons, which will be expanded to 800 tons/day by
mid 2010. The estimated milling capacity for other oilseeds is about 900 tons/day (two
large mills of 200 and 300 tons/day, plus one with 200 tons/day solvent extraction plus
about a sub-total of about 200 tons/day of smaller milling capacity) with additional
investment in solvent extraction already planned. Currently, palm oil refining is operating
at near full utilization and uses only imported CPO. A Common External Tariff of 10% is
expected to be applied by the East African Community in 2010 on imported CPO.
Milling capacity utilisation for oilseeds was about 30% in 2009, so there is a very large
unfilled demand for locally supplied crushing seed. The investment in milling capacity has
resulted in a very competitive environment, keeping prices low to the consumer while
creating a market for crushing material from farmers as millers compete for limited local
supplies. The construction of a solvent plant has changed the parameters of oilseeds
production and has valorised the production of soybean, with farmers receiving
UGX 750/kg compared to UGX 500/kg for sunflower, and slightly higher yields. It is
expected that the mix of oilseeds cropping will change as farmers respond to these price
signals and replace sunflower with soybean. This will stimulate the animal feeds industry,
since soybean meal is the primary protein source for poultry, pig and fish rations.
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Project Objectives. The overall goal is to contribute to sustainable poverty reduction in

the project area. The development objective is to increase the domestic production of
vegetable oil and its by-products, thus raising rural incomes for smallholder producers
and ensuring the supply of affordable vegetable oil products to Ugandan consumers and
neighboring regional markets. The project will achieve this by supporting farmers to
increase their production of crushing material of both oil palm and oilseeds (sunflower,
soybean, sesame and groundnuts) and establishing commercial relations to directly link
them to processors.
Components.
Oil Palm Development to benefit about 3 000 smallholder households:

o
Consolidation and expansion of oil palm in Kalangala District: through

development of an additional 2 000 ha of smallholder plantations and ferry
transport to outlying islands, thus bringing the smallholder total to 4 700
ha; and measures to ensure the sustainability of the farmers growers
trust. Environmental mitigation and monitoring will cover all activities,
along with gender and HIV/AIDS mainstreaming.
Oil Palm development on Buvuma Island through the replication of the

Bugala Island nucleus estate-smallholder model of 10 000 ha, with the
upgrading of ferry service to the island, the establishment of 3 500 ha of
smallholder plantations and setting up of a farmer growers trust.
Environmental impact assessments (EIAs) will be carried out prior to
starting development, with mitigation and monitoring included in all
activities.
Identification of new areas for oil palm development.
Oilseeds Development: Continued up-scaling of Lira to a modern agro-industrial

hub for oilseeds and promotion of Mbale as an Eastern Uganda oilseeds hub, and
Gulu as an emerging commercial hub neighbouring southern Sudan along with
Arua and the surrounding districts as the West Nile hub, to benefit a total of about
136 000 smallholder households.
o
Seed production will provide support to NaSARRI and NaCCRI for breeding
of improved varieties/hybrids with industry demanded characteristics.
Extension support for about 5 900 farmer groups through annual

contracting for oilseed specific extension from the private sector. Extension
messages will focus on maintaining soil fertility through the use of hybrids
and fertiliser, conservation farming and sustainable land management, as
well as gender issues for labour and income sharing, and HIV/AIDS
awareness building.
Other Value Chain Activities will include a partnership with SNV under a
stand-alone IFAD grant for continuation of the Oilseeds Sub-sector
Platform (OSSUP) to coordinate the industry, and a guarantee fund for
financial institutions to mitigate the lending risk associated with rainfall
variability, and support to UNBS for food safety standards in more remote
areas where small-scale processing is still the norm.
Project Management Unit: For efficiency, the PMU in Kampala will be upgraded to
have 10 contractual professional staff and support staff, and there will be one
small office in each of the four hub offices staffed with a professional hub
coordinator.
Target Groups. For the oil palm component, smallholder farmers are the direct target
group.
The indirect target groups are nucleus estate workers and labourers on
smallholder plots. For the oilseeds, the target groups are emergent oilseeds farmers,
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and semi-commercial and commercial smallholders. Social measures for gender and
youth are included for all target groups.
Project Costs and Financing. Total investment and recurrent costs, including
contingencies, are estimated at USD 147 million (UGX 294 billion).
Oil Palm
Development takes up 81% of total base costs, followed by Oilseeds Development at
13% and Project Management 6%. IFAD will finance USD 52 million (UGX 108 billion) on
highly concessional terms, while approximately USD 70 million (UGX 140 billion) will be
financed by Oil Palm Uganda Limited (OPUL) for oil palm development, representing 48%
of total project costs. Government contribution will be about USD 14 million (UGX 28
billion) representing 9.6% of total cost, mainly to cover the cost of land purchase, ferry
barge transport and landing sites, and taxes. A strategic partnership with Kalangala
Infrastructure Services financed by InfraCo for ferry barge transport may substantially
reduce the cost to Government. Farmers will provide USD 3.9 million in labour. KOPGT
will achieve self-sufficiency by the end of 2015, and will start financing its own
operational costs, while the Trust will finance about USD 4.4 million in smallholder
plantation development during the final years of the project on Buvuma Island from the
repayments made by Kalangala farmers. IFAD will provide a grant to SNV of USD 1
million for 5 years to support the OSSUP platform, and SNV will provide USD 340 000 for
3 years with more funding later.
Benefits. A total of about 139 000 farm households (representing about 834 000
people) are expected to benefit directly from the project, of which about 3 000
households will benefit from investments in oil palm, and about 136 000 households will
benefit from growing oilseed crops. Consumers are expected to benefit from increased
access to edible oils and fats and soap products at affordable prices. There are also
secondary benefits to stimulating other industries, particularly animal feeds industry in
the case of soybean meal. The economic analysis undertaken is at the smallholder
primary producer level before value addition through the value chains, and indicates that
the project will have a strongly positive economic impact, with an overall economic rate
of return of 19-25% which will principally be focused on reducing the poverty of the
participating households. There are also substantial indirect benefits which have not been
included in the economic analysis and these include household and village level
processing as well as increased informal transport and trade in rural areas. Another
important unquantified benefit is the reduced need for vegetable oil imports when oil
palm reaches full production on the 20 000 ha to be planted by the private sector and
smallholders. About 85 000-100 000 tonnes of crude palm oil will be produced each year
in Uganda, and this will go a long way to making the country self-sufficient in vegetable
oil production. This will reduce the need for imports at an estimated foreign exchange
value of about USD 55-70 million annually.
Tax Revenue. Two out of the three large-scale millers are on the list of the top 20
taxpayers in Uganda, and the third is expected to join shortly. Thus GoU is earning
substantial tax revenue from the sector, even taking into account the tax holidays
provided for direct investments made beyond 25 km outside of Kampala by two of the
large foreign companies.
Sustainability. At the end of the project period, farmers will have learned modern
production technologies and improved their business skills. They will have established
direct linkages with processors and financial institutions. Thus, sustainability is based on
the knowledge which farmers will have gained and the network of commercial relations
which will have been established. KOPGT will have been put on a sustainable basis, and
will probably require no additional funding to continue financing oil palm development in
Uganda.
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REPUBLIC OF UGANDA
VEGETABLE OIL DEVELOPMENT PROJECT, PHASE 2 (VODP2)
PROJECT DESIGN REPORT
MAIN REPORT
I. INTRODUCTION
1.
The Vegetable Oil Development Project (VODP) was conceived in the mid-1990s to
reduce Ugandas heavy reliance on importation of vegetable oils, despite the good
potential for domestic production, and to address the low intake of vegetable oils by the
population. VODP supports vegetable oil production, and also agro-processing and
marketing, and is an important thrust in the Government of Ugandas (GoU) effort to
modernise and commercialise agriculture.
The Project is highly innovative and
introduced a new crop to Uganda and a new form of Public-Private Partnership (PPP) in
the oil palm sub-sector. VODP has addressed rural poverty by involving smallholder
farmers in crop production and small-scale processing, improving the nutrition of the
population through increased vegetable oil intake, and addressing food security through
the growing of alternative cash crops for income generation.
2.
There has been a substantial increase in the area planted, principally to sunflower,
with 80% of the production coming from five districts neighbouring Lira. The increased
availability of crushing seed has in turn attracted investment in oilseed milling and
refining. About 90 000 rural households have seen their cash incomes increase from
sunflower production and local processing under the oilseeds component. The
institutional support component has supported research and development, the
application of quality standards, and provided funding to a variety of stakeholder
organisations, local governments, farmer organisations and project coordination. The oil
palm component was launched in December 2004 and has achieved 87 percent of the
initial 10 000 ha area objective set for smallholder and nucleus estate plantations
development in Kalangala District. The agreement with the private sector partner
foresees ongoing expansion of the oil palm sub-sector up to 40 000 hectares as well as
major investments in oil milling and refining facilities. The company constructed a palm
oil refinery which was completed in 2005, and has the capacity to process all of the crude
palm oil which can be produced in Uganda under its agreement with GoU; it is currently
processing imported crude palm oil. The oil palm trees from the initial planting in 2004 in
Kalangala District are just maturing, and the construction of the palm oil mill was
completed in January 2010, with the first domestically produced palm oil expected to be
on the local market in 2010.
3.
Peace has returned to Northern Uganda. Lira has become the oilseeds agroindustrial hub for oilseed crushing. In addition to the existing small millers, three large
millers have made new investments, including installation of a solvent extraction plant
which will improve efficiency through improved oil recovery from expeller cake and opens
up opportunity for soybean to occupy a greater share in the oilseeds market. The current
installed milling and refining capacity is operating at 30-50 percent of capacity, so that
there is a strong market for all of the crushing material produced by farmers.
Consumption of vegetable oils has increased from 2.3 kg/capita to about 4.3 kg/capita in
the eight years of VODP implementation in the project area although it still falls short
of the FAO annual minimum requirement of about 7.0 kg/capita. Given the low levels of
consumption of oils and fats in Uganda and neighbouring countries, and increasing
regional demand for protein meals for the animal feeds industry, national and regional
markets for vegetable and its by-products are expected to grow at 9-11% per annum for
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4.
At the end of 2006, when IFAD and the Government of Uganda (GoU) were
discussing the future pipeline projects, the Government requested that IFAD consider
financing a follow-on phase to VODP. In 2007, IFAD engaged in an intensive discussion
process in Uganda with the Ministry of Agriculture Animal Industry and Fisheries (MAAIF),
the Ministry of Finance, Planning and Economic Development (MFPED), the private sector
partner for oil palm development of VODP, as well as and other relevant stakeholders
including donors. In January 2008, the Government submitted an official request to
IFAD, along with a concept note, for the follow-on phase to VODP. IFAD fielded a
preliminary design mission in August 2008 to confirm the potential for a second phase.
IFADs Office of Evaluation carried out an Interim Evaluation of VODP in MarchSeptember 2009, and the conclusions informed the full design mission in SeptemberOctober 2009 which produced a draft Project Design Report which was discussed with
GoU in November and December, 2009. A national workshop was held on 9 December
2009 to discuss the conclusions of the Interim Evaluation, and the new approach of
VODP2 was presented to stakeholders. Appendix 1 contains the list of persons met
during the design missions in September and December 2009, and Appendix 2 contains
the project life file.
II. STRATEGIC CONTEXT
A. The Rural Development Context
5.
Poverty and Rural Development Context: In 1997, the GoU put in place its
Poverty Eradication Action Plan (PEAP) with the objectives of supporting rapid economic
growth to reduce poverty. Poverty has declined from about 56% of the population in
1992 to about 31% in 2005. Although enormous progress has been made in reducing
poverty, Uganda continues to be among the poorest countries in the world. Ugandas
Gross Domestic Product (GDP) per capita is about $270. In 2007, the country ranked
154th among 170 countries on the United Nations Development Programmes Human
Development Index (HDI). Its rating of 0.5 on the HDI scale has made the country no
longer eligible for grant development assistance from international financial institutions.
However, poverty remains firmly entrenched in rural areas which are home to more than
85% of Ugandans. Over half of the rural people live in poverty, particularly in the north
and eastern region where there has been 25 years of civil insecurity.
6.
Agricultural Sector: With good rainfall and the potential to produce a range of
crops, the agricultural sector, which accounts for about 30% of GDP and 75% of
employment, can generate incomes to further reduce rural poverty. As a landlocked
country, exports and imports are hauled overland through neighbouring countries. This
impacts on costs, and is especially relevant to the vegetable oil sector, since a substantial
proportion of Ugandas needs are imported from Asia at very high overland cost. Land
and human productivity in agriculture remain low, and while markets for agricultural
produce are developing, their growth faces a number of constraints.
B. Policy and Institutional Framework
7.
In 2008, the Poverty Eradication Action Plan (PEAP), which provided the overall
policy foundation for national development, reached its ending point and the process of
formulating a successor, the National Development Plan (NDP), is underway. MAAIF is
finalising its Development Strategy and Investment Plan (DSIP) which outlines the
priorities for agricultural development as well as Ugandas Compact for Comprehensive
Africa Agriculture Development Program (CAADP) which is expected to be signed in
March 2010. The long term vision of the GoU is to reduce the incidence of poverty from
44% in 1997/98 to below 10% by 2017, and the NDP has doubled the expenditure for
agriculture to 6.6% of the budget (though still under the 10% objective of CAADP), as
agriculture is deemed to be one of the key sectors driving economic growth in Uganda to
promote sustainable livelihoods and reduce poverty. These initiatives provide the policy

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framework which will underpin the execution of VODP2. Details are provided in Working
Paper 1. National Policy and Institutional Framework and the key points are summarised
below.
8.
The external evaluation of the PEAP, concluded in 2008, notes that the reduction of
the national poverty headcount to 10% by 2017 is achievable, provided GDP growth does
not fall below 7% per annum, population growth is reduced, and inequality does not
increase. The evaluation concludes that the main driver of economic growth has been
private rather than public investment. The reduction in civil strife, establishment of a
stable macroeconomic environment, fiscal prudence and market liberalisation have
provided the enabling environment. Other findings of the external evaluation were that:
(i) there has been a significant under-spending on agriculture and roads, according to the
pro-poor criteria; and (ii) Ugandas low tax to GDP ratio makes it still aid dependent. Key
policy recommendations arising from the evaluation were to:
maintain an open economy to promote competitiveness, encourage private

investment and create productive employment;
reduce population growth to accelerate demographic transition;
improve economic infrastructure to reduce the cost of doing business;
transform agriculture to raise farm productivity;
raise the quality of human capital to increase economic growth; and
mobilise domestic resources to increase fiscal autonomy.
9.
MAAIF presented its draft Development Strategy and Investment Plan (2009/102013/14) in October 2009. The vision is for A competitive, profitable and sustainable
agricultural sector with the mission articulated as transforming subsistence farming to
commercial agriculture. The overall objective is to promote food and nutrition security
and household incomes through coordinated interventions to enhance productivity and
value addition, provide employment opportunities, and promote domestic and
international trade. The focus is on specialisation in strategic, profitable and viable
enterprises and value addition through agro-zoning, with specific mention of the
establishment and maintenance of outgrower schemes through PPPs, and support to PPPs
aimed at establishing value chains and supporting agro-processing industries, while
ensuring quality for Ugandan agricultural products to compete in domestic, regional and
international markets. Under the DSIP, PPPs will be promoted to encourage private sector
participation and farmers will be trained to consider farming as a business with a focus
on earnings and profitability. Value chains will also be promoted to improve linkages to
markets, while farmers will be encouraged to specialise by agro-ecological zone.
10. The guiding principles of the DSIP are (i) support for the Governments policies of a
private-sector led and market-oriented economy, with the aim to promote private
investment in agriculture; (ii) support to the agricultural zoning strategy for value chain
development of strategic commodities to create viable agro-industrial development; (iii)
agricultural services provided to all farmer categories as individuals or in groups, with
attention to gender equity, and with scope for specific focus on strategic commodities in
addition to the general provision of agricultural support services; (iv) improved
agriculture extension services provided through the decentralised system of government;
(v) there may be a need for special extension services in specific areas of the country
which have different needs and/or marginalised groups; and (vi) key agricultural
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C. IFAD Country Programme

11.
IFAD has provided USD 193.5 million to finance 12 programmes over the past 25
years. Under the donor harmonisation effort over the past five years, IFAD has identified
three key priority areas where its support is focused:
improving land and labour productivity through agricultural technologies. This

aims at helping farmers move from subsistence to market-oriented production to
increase their incomes and improve their living standards and food security;
support for the decentralisation process to strengthen local levels of government

and improve rural infrastructure; and
building rural financial services to encourage small-scale farmers to save part of

their earnings and invest in increasing productivity and cope with risk.
12.
There are five IFAD-supported Programmes currently ongoing. Two are under the
Ministry of Agriculture, Animal Industry and Fisheries (MAAIF): the Vegetable Oil
Development Project (VODP) which is financed by IFAD and co-financed with substantial
investments from the private sector, and the National Agricultural Advisory Service
(NAADS) which is financed by a group of donors of which the World Bank and IFAD are
providing the greatest share of funds. IFAD is exclusively funding the Rural Financial
Services Programme (RFSP) which is operating nationally. IFAD is funding two
programmes under the Ministry of Local Government (MoLG): the Community
Agricultural Infrastructure Improvement Project (CAIIP) co-financed with the African
Development Bank which is improving about 500 km of district and 3 000 km of
community access roads in 26 districts, many of which will be covered by VODP2, and
the District Livelihoods Support Programme (DLSP) operating in 13 districts of which six
are in the areas which also will be covered by VODP2.
13.
Support for Agricultural Modernisation: IFADs strategy of support for an
agriculture-led approach to poverty reduction recognises the fact that the overwhelming
majority of the poor earn their livelihoods from Ugandas highly productive land
resources and favourable climatic conditions. The mostly unrecorded exports of food
crops to neighbouring countries and the encouraging performance of non-traditional
export crops further confirm the important role that market linkages can play in
commercialisation of smallholder agriculture. This presents a challenge to ensure that
agricultural commercialisation responds to the specific requirements of the rural poor.
14.
Public-Private Partnerships: Through its support for VODP, IFAD has played a
pioneering role in promoting PPPs for development and poverty alleviation. This is
consistent with IFADs Private Sector Development and Partnership Strategy which seeks
to engage the private sector to bring benefits and resources to IFADs target group. The
objective of the strategy is to increase pro-poor private sector operations in rural areas
through: (i) policy dialogue; (ii) investment operations to support local private sector
development; and (iii) partnerships with the private sector in order to leverage additional
investments and knowledge. VODP has demonstrated that this can be done in Uganda.
15.
Capacity Enhancement: Within the national policies frameworks and an
emergent, sector-wide approach to harmonisation of development assistance, IFAD aims
to: (i) promote community-based development; (ii) build the capacity of decentralised
systems of governance; (iii) improve smallholder access to capital and technology; (iv)
mainstream gender issues and HIV/AIDS prevention and mitigation practices; (v)
respond to the emerging land issues confronting smallholders; (vi) empower vulnerable
groups to gainfully participate in development processes; and (vii) enhance household
and community capacity to deal with post-harvest and agro-processing challenges in the
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16.
Many rural poor lack the skills to become better farmers, workers, entrepreneurs
or traders. Moreover, the costs of interacting with the private sector are often prohibitive
for the poor rural people acting individually. The private sector, in turn, is often reluctant
to invest in rural areas because of the high transaction costs and the risks involved in
dealing with dispersed, unorganised rural dwellers and side selling by smallholders.
IFADs investment operations are intended to strengthen the business capacity of the
rural poor, as well as fostering the linkages which are needed to connect them to
markets, whether through intermediaries or direct business relationships. Such skills and
understanding are critical for helping poor farmers to understand the private sector, and
developing the capacity to negotiate on an equitable basis. IFAD recognises the crucial
importance of farmer organisations to interact with private sector operators to reduce the
cost of transactions and help make transactions more transparent and equitable.
17.
Post-Conflict Support: The proposal to extend VODP2 activities into the conflictaffected northern part of Uganda is consistent with IFADs Policy on Crisis Prevention and
Recovery and GoUs Peace and Recovery Development Programme (PRDP) for northern
Uganda. In a post-conflict environment, IFAD seeks to help restore peoples livelihoods
and develop the social and human development processes of rural communities in a way
that fosters longer-term development. This is, particularly relevant in northern Uganda
where large numbers of people have been in camps for extended periods and have lost
the means of independent livelihoods, and are now beginning to return to farming.
Short-season oilseed crops provide an excellent entry point into rural commercial activity
by virtue of their low capital requirements, along with small scale processing to add
value.
III. POVERTY AND SOCIAL CAPITAL
18.
Ugandas poverty levels have fallen from 56% in 1992 to about 31% in 2005.
Nonetheless, nearly 20% of households or about seven million people are living in
chronic poverty and inequality of income is worsening. At the present level of poverty
incidence, it is estimated that annual growth in real GDP would need to be maintained at
7% and the population growth reduced to 2.4% if the country is to achieve its Millennium
Development Goal targets. The key factors influencing poverty are: (i) household size;
(ii) low levels of human capital, mainly defined by level of education; (iii) high rates of
dependence; (iv) small land holdings; (v) lack of assets; (vi) over reliance on subsistence
agriculture; and (vii) limited alternative sources of income. Aggravating factors include:
presence of vulnerable persons such as the disabled, widows, the elderly, orphans, and
those affected by HIV/AIDS; alcoholism; polygamy; and single headed households.
19.
Major influences on all categories of poverty include location, gender and
livelihood. While only about 11% of the urban population was in chronic poverty during
the 1990s, the figure for rural areas was over 21%. The comparable figures for regional
and occupational differences in chronic poverty incidence were: 39% in the north and
14% in the centre; and, for the year 2002-03, 50% for crop farming households, 34%
for non-crop agriculture activities and 17% for trade. There is also a substantial northsouth divide in poverty, with the level increasing from south to north. Most of the
districts in the southern half of the country have less than 20-30% of the population
below the poverty line. This increases to 40-60% in the former conflict-affected lower
northern districts and over 70% in the far north.
20.
The gender aspects of poverty relate mostly to the unequal treatment of women.
A combination of the inequitable legal structure for land rights, low participation in labour
markets, long farming and household work hours, higher predisposition to HIV/AIDS,
polygamy and alcoholism among men, has forced many widow-headed and polygamous
households into chronic or transitory poverty. Rural women work harder and longer than
men; have limited access to resources, including money, and exercise less or no control

Main Report
over what they produce. The Government has attempted to take affirmative action to
integrate women into the development process and there is evidence of increasing
participation. In the informal sector and, especially, in rural areas, Uganda has some of
the most cohesive, functional and informed women groups, in which gender concepts are
widely understood, even if not always practised. Poverty and its principal determinants in
Uganda is discussed in Working Paper 2.
IV. LESSONS LEARNED
A. Findings of the Interim Evaluation
21.
There has been close work and learning between the Project Coordination Office
(PCO) of VODP and IFADs Office of Evaluation. The projects summary self-evaluation is
provided in Appendix 3 to this report. The overall assessment of the Interim Evaluation
(IE) of VODP has been moderately satisfactory, as a result of the wide variance
between the performance and achievements of the three different components, oil palm
development, oilseeds support and institutional development. Overall the evaluation
team found that the project had a very strong impact in promoting sunflower cultivation
and processing and reached a very large number of beneficiaries, despite the civil
insecurity which affected much of the project area during early implementation. The PPP
for the oil palm was found to be extremely innovative, with good potential for replication
and many lessons about the challenges and demands of working with the private sector.
The delays in start-up have meant that the benefits are still to be achieved and the
number of farmers reached is low. The organisations benefiting from institution
strengthening have fulfilled their obligations but they could have made a much stronger
contribution the development of the vegetable sub-sector.
22.
Oil Palm. The IE draws a number of lessons:
For future PPPs, private sector operators need speedy decisions while the
consultative and approval processes with public institutions can take time. Delays
in executing PPPs can have cost implications and organisational implications which
can derail the whole process. Given the differing demands on the private sector
and public institutions (Government and IFAD), there is a need for a high level of
commitment by all partners to work together. Good public relations are critical to
how people perceive these partnerships;
The explicit introduction of environmental risk mitigation measures and regular

environmental monitoring has proved to be effective and should be continued;
Establishing the farmers organisation and financial trust for oil palm requires
substantial technical backstopping, and farmers will continue to need technical
support for an extended period in order to learn about the new crop.
23.
Traditional Oilseeds. The lessons from this sub-component are:
Efforts to integrate farmers into the value chain increases the effectiveness of
individual links in the chain as well as increasing profitability along the chain for
all actors;
Working through local governments in the early period of implementation (prior to

NAADS) enabled the project to motivate local political leaders, while working
through farmers and millers organisations facilitated linkages to other operators,
especially the millers;

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Farmers are facing three main challenges; adopting measures to address declining
soil fertility, the introduction of farm mechanisation (animal traction) and
improving their post-harvest handling.
24.
Institutional Strengthening. The IE found the PCO has been key in project
implementation, although it has very few staff. The IE also found that the Vegetable Oil
Development Council (VODC) did not perceive its role in sub-sector guidance. This
coordination role has now been taken up by the Oilseeds Sub-sector Platform (OSSUP),
and the IE notes that it has wide representation and draws considerable enthusiasm and
energy from its participants. The IE has recommended that OSSUP continue to play its
coordination role under VODP2 and that it should benefit from support from IFAD.
B. Other Lessons Learned
25.
Many operational lessons have been learned during the course of implementation
of VODP and other IFAD financed programmes in Uganda, as well as from other donors
and Government. The most important lessons are about processes and the challenges of
working with farmers and a diversity of partners.
Benefits of private sector partnerships: VODP has demonstrated that the PPP
approach can bring together a large corporate operator and smallholders, if clear
mechanisms to ensure equity have been put in place. For the oilseeds industry,
private sector engagement with VODP has been less formal but other donors
(USAID and Danida) have developed operational models for PPPs in oilseeds.
Need for time and capacity building: Developing small scale resource-poor
farmers is a gradual process that requires time. Flexibility and patience are
required to overcome the aversion to change among many of the rural poor, while
poverty limits the ability of small-scale resource poor farmers to invest in
activities that help them move from subsistence to farming as a business. There is
a need to build capacity and support access to technologies, with regular followup to foster the adoption of knowledge and skills. There are many activities for
these groups which can significantly improve their well-being, including household
mentoring to ensure fairer division of labour and earnings from oilseeds activities.
Building HIV/AIDS competency helps prevention as well as coping, so that family
investments are not fragmented.
Time for partnerships. Considerable time, resources, flexibility, patience and

understanding are required for putting in place inter-donor collaboration, and
forging partnerships between the Government and the private sector to raise
production by smallholder producers.
Implementation modalities: In order to put in place PPPs which promote selfsustaining activities, projects need to have credibility as operators, and under
VODP2 there is a need for great dynamism and quick response capacity in order
to be able to put together private sector partnerships for oilseeds and continue
the partnership for oil palm.
Mainstreaming environment: The same sort of attention which has been

accorded to environmental issues associated with oil palm should be associated
with oilseeds production and processing, but this will require time to implement.
Rural Infrastructure. The poor state of the rural road network raises transaction
costs for farmers getting their produce to market. To facilitate marketing, there is
a need to ensure that community access roads are developed as farmers groups
increase their agricultural production.

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V. THE PROJECT
A. Rationale for the Second Phase
26.
Market for Vegetable Oils. Rising global demand for vegetable oils has led to a
significant structural change in the supply-demand balance and much stronger prices.
Analysts generally agree that the next decade will see higher price levels than have
prevailed in the last 20 years or so. The opportunities for vegetable oil development are
particularly strong in Uganda, since about half of the domestic market is supplied by
imports and could be replaced by national production. Domestic demand is growing at an
average rate of around 9% per annum (3% due to population growth and the remaining
6% attributable to increasing incomes). Kenya and Rwanda imported over 90% of their
vegetable oil requirements in 2008, while Tanzania imported 76% and the Sudan
imported 54%. Thus, the regional and national markets are expected to be able to
absorb all of the vegetable oil produced by Uganda without leading to significant price
weakening even in the face of growing production. Working Paper 3: Vegetable Oil
Market Overview provides an overview of global supply and demand of vegetable oils
including palm oil, and an analysis of the regional and national markets for vegetable oil.
27.
Building on the Achievements of VODP.
Continued support for the
development of the vegetable oil sub-sector presents many opportunities for rural
development and poverty alleviation. The IE has confirmed that VODP has been
successful in increasing vegetable oil production in Uganda, with substantial positive
financial, economic and social impacts. The lessons learned during implementation of
VODP provide a sound basis for further development of the vegetable oil sub-sector.
While time was needed to complete the arrangements with the private sector partner for
oil palm development, and the conflict in large areas of northern Uganda limited the
scope of some activities for oilseeds, the success of the project is now confirmed.
Building on the investments already completed and the availability of tested and proven
models for both oil palm and oilseeds development which have the potential to be
expanded and replicated over large parts of the country, the sub-sector can provide
livelihoods for a growing number of households to reduce poverty. This will take place
within the context of an evolving, but generally supportive, policy and institutional
framework, expanding national and regional markets for vegetable oils, a growing
knowledge base, and a productive partnership with the private sector.
28.
Oil Palm. Oil palm is the most productive and efficient oil crop in the world, with
an average yield of refined oil of about 4.2 tonnes per ha per year compared to about
0.4-0.6 tonne per ha for sunflower and soybean. Oil palm needs to be grown where
there is adequate water (usually in areas of more than 1800 mm/annum rainfall or in
some cases using irrigation) and relatively warm temperatures. Together with the need
for the proper growing conditions, the high initial investment cost (about USD 5
000/hectare for 4 years not including the cost of land) constitute a barrier to entry.
29.
The oil palm component of VODP has pioneered a unique form of PPP in Uganda
and has leveraged major foreign direct investment to produce domestically an essential
food commodity while creating factory and plantation jobs as well as rural livelihoods for
smallholder producers. The model of nucleus estate and smallholder development has
provided for knowledge transfer while protecting and helping farmers to plant a
previously unknown industrial crop. The vertically-integrated model (plantation > crude
oil mill > oil refinery > consumer or soil to pan as expressed in the private sectors
publicity) brings the efficiency of modern extraction techniques together with
environmental safeguards, avoiding the negative consequences caused by smallholder
processing (deforestation for fuel and pollution of water sources).

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30.
For IFAD, its key strength is the mutual dependency between the nucleus estate
and smallholders, with smallholders providing the incremental production which
generates the returns to scale that produce high profits at the margin justifying the
overall investment for the private sector. This relationship, in which technology and
knowledge are embedded, provides a secure market for smallholder producers and
guarantees a supply of raw material for primary processing to the palm oil mill operated
by the nucleus estate. The implementation of the oil palm component has been guided by
the following principles:
It was decided very early on in 2001 by both the private sector and the
Government that there would be no degazettement of protected areas. The
Government decided that land for the nucleus estate would only be purchased on
a willing-buyer, willing-seller basis, in line with the laws of the country.
Respect for the environment would underpin all activities, which has included
environmental assessments prior to all activities and incorporating mitigation
measures to address the potential negative impacts, and compliance monitoring.
The mitigating measures include the implementation of a 200 metre forest
protective border along the lakeshore, zero-burning on lands being used for
plantation development; no use of herbicides and the planting of cover crops to
prevent soil erosion; minimum use of agro-chemicals; effluent tanks to treat
waste from the palm oil mill, with the sludge being used as organic liquid fertiliser
on the plantation; and waste materials removed from the palms (such as fronds
and empty fruit bunches) being used for mulching. Environmental monitoring
takes place through the relevant government agencies and the Impact Monitoring
System (IMS), as well as self-conducted environmental compliance audits by the
private sector.
Since the private sector is a very large player who has a de facto monopolistic
position for supplying specialised inputs and purchasing farmer Fresh Fruit
Bunches (FFBs), the legal agreements which provide the framework for the
investment have been prepared to ensure fairness and equity for smallholders,
the most important of which is the use of the import parity price for palm oil to
establish the price that the private sector operator will pay farmers for their FFBs.
All inputs are supplied by the private sector at the same cost as they pay
themselves.
The three above-mentioned governance mechanisms, the Service Cost Panel, the
FFB Pricing Committee and the Impact Monitoring System Committee ensure
equity for farmers and respect of the environment.
31.
A specialised Trust has been established to provide financing and technical
backstopping on oil palm to farmers, and while it has faced many challenges, it is now
growing in competency. Oil palm is a capital intensive crop, and the Trust has developed
a financing mechanism which allows any farmer with secure access to land to participate
in smallholder schemes. With strong technical backstopping for initial land development
and planting, the crop can be grown on small plots by resource-poor farmers, and
becomes profitable once harvesting begins - around the fourth or fifth year, and very
profitable after year 10 when full yields are attained. Participation in a smallholder oil
palm scheme offers a certain escape from poverty. See Working Paper 4. Oil Palm
Development for a presentation of the organisations and institutional arrangements, the
achievements so far, and the description of what is planned under VODP2.
32.
Oilseeds. In the early 1990s, the Government of Uganda identified oilseeds as a
crop where the country has good production potential and it has created an enabling
environment for its development. Oilseed crops are principally cultivated in drier areas in

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the northern, north-central, north-western, and eastern regions where the majority of
the poor are located. As the larger majority of farmers cultivating oilseeds are poor
smallholders, it can be considered a pro-poor crop. Oil crops (oil palm, sunflower,
sesame, soybean, groundnuts, etc.) are one of the nine strategic crops for the GoU, both
in terms of promoting production for import substitution and for export to neighbouring
countries. IFAD, along with other development partners (USAID and Danida) have
financed a number of different projects and programmes in order to promote national
production of oilseeds.
Donor support and extension provision by the National
Agricultural Advisory Services (NAADS) have been through partnerships with the private
sector, including large scale millers. SNV, a Dutch NGO, has been working in the oilseeds
value chain for several years, and has been organising stakeholders for coordination of
the oilseeds sub-sector under OSSUP.
33.
Combined, these efforts have resulted in important increases in the supply of
sunflower for crushing, which has attracted foreign investment into the sector. In 2007,
GoU reached agreement with another private sector operator to establish a mill and
solvent extraction plant in Lira. The estimated milling capacity for oilseeds (other than
palm oil) is about 900 tonnes (two large mills of 200 and 300 tonnes/day, plus one with
200 tonnes/day solvent extraction plus about another 200 tonnes/day by smaller mills)
with additional investment in solvent extraction already planned. Milling capacity
utilisation is about 30% in 2009 so there is a very large unfilled demand for locally
supplied crushing material. Furthermore, the construction of a solvent plant has changed
the parameters of oilseeds production and has valorised the production of soybean, with
farmers receiving UGX 750/kg compared to UGX 500/kg for sunflower. Thus, it is
expected that the mix of oilseeds cropping in Uganda will change, as farmers respond to
price signals and incorporate soybean into their crop rotation. The production of soybean
will also be a dramatic stimulus to the animal feeds industry, since soybean meal is the
primary protein source for poultry, pig and fish rations.
34.
In the past ten years despite civil insecurity, Lira has developed into an agroindustrial hub for oilseed milling as a result of the establishment of a 80 tonnes/day
processing plant in 2007, and up-scaled since 2007 by further direct foreign investment
in a crushing mill and solvent extraction. This is largely attributed to the expansion of
sunflower production concentrated in the six districts of Apac, Dokolo, Lira, Masindi,
Oyam and Soroti. Lira is the focal point of the milling industry, with associated seed
distribution and technical advisory services. These six districts together account for about
80 percent of the countrys sunflower production. The experience gained has
demonstrated that oilseed millers will invest in a place where they are able to buy
consistent supplies of good quality crushing seed to sustain their respective operations,
even if civil security is still subject to uncertainty. See Working Paper 5. Oilseeds
Development for detailed discussion of the operators in the oilseed sub-sector and the
current market situation in Uganda, as well as planned activities under VODP2.
B. Geographical Scope of the Project
35.
Oil Palm Project Area. Under VODP, oil palm development is concentrated on
Bugala Island in Kalangala District, which covers about 80 islands in Lake Victoria.
VODP2 will continue with the development of smallholder oil palm on Bugala Island and
will extend smallholder oil palm development to a few suitable outlying islands in
Kalangala District which are reasonably close to the palm oil mill on the nucleus estate,
so that transport is convenient by barge. Expansion of oil palm development is also
planned for Buvuma Island and Mukono/Buikwe lakeshore areas, with development
targets similar to those for Kalangala. Additional areas suitable for oil palm development
with the private sector operator will also be identified. Trials, land identification and
feasibility assessments will be carried out in districts which have already been identified
as having potential to grow oil palm.
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36.
Oilseeds Project Area. Based on experience gained from the Lira hub, VODP2
will focus on raising the production of crushing material in the Lira hub, and three
additional hubs where there are good prospects for attracting additional private
investment in oilseed milling capacity and service provision (seed supply and technical
services) by the industry itself. Lira will remain the primary hub, followed by the Eastern
Uganda hub where there is already good production potential and the emergence of
service providers. Kitgum-Gulu and Arua are already recognised shopping areas for
southern Sudans growing economy and the development of agro-industrial hubs in these
towns will provide transit points in supplying both domestic and export markets for
vegetable oils. In order to encourage consolidation and to achieve economies of scale,
farmer support activities will be largely limited to an area of about 50-100 km radius
around the relevant hub. The districts to be covered by the respective hubs are:
Lira hub: To consolidate the gains VODP2 will continue with upscaling activities in
the catchment area that supplies the hub with crushing material, covering the
districts of Lira, Apac, Dokolo, Katakwi, Oyam, Masindi, Serere, Soroti,
Kaberamaido, Amuria, and Amolatar;
Eastern Uganda hub - once fully developed, the Mbale hub will draw raw
material from the districts of Mbale, Bududa, Budaka, Bukedea, Bukwo,
Kapchorwa, Kamuli, Kumi, Manafwa, Pallisa, Sironko, Bugiri, Busia, Tororo,
Butaleja, Iganga, Jinja, Namutumba and Kaliro. The proximity of Mbale to the
Uganda-Kenya border makes it an ideal location considering that Kenya is a large
importer of both vegetable oils and oilseed cake for its livestock industry;
Gulu hub the hub would draw raw material from the districts of Gulu, Kitgum,
Amuru, Adjumani and Pader; and
West Nile hub which would have, as its catchment area, the districts of Arua,
Koboko, Maracha, Moyo, Nebbi, Nyadri, Terego and Yumbe. The choice of Arua as
the center of the West Nile hub has an added advantage by virtue of its proximity
to Ugandas borders with the Democratic Republic of Congo and Sudan.
37.
To consolidate the gains achieved in the Lira agro-industrial hub, VODP2 will
continue with upscaling activities in the catchment area that supplies the hub with
crushing material. The Lira hub is well supplied with hybrid seed and farmers experience
positive competition in the market for their oilseeds. Oilseed production is already an
established part of the farming system for an important share of households in the Lira
hub area, and seed/input supply and marketing channels are functional. To raise the
volume of crushing material supplied, VODP2 support will focus on upscaling and raising
productivity of farmers already cropping oilseeds. VODP2 will also encourage farmers
who are not yet growing oilseeds to do so in order to raise the production of crushing
material from contiguous areas to achieve economies of scale (known as in-filling).
Soybean will also be promoted as an alternative oilseeds crop. Once oilseed production
volumes, in and around the three new hubs, reach a level where millers find it attractive
to establish local mills or buying centres, they will eventually evolve into agro-industrial
hubs also providing services and inputs, similar to Lira.
C. Target Groups
38.
Oil Palm: The primary target group is smallholder farmers at each of the locations
of oil palm development (Bugala and outlying islands, Buvuma Island and
Mukono/Buikwe lakeshores) along with inclusive measures for women and youth. The
indirect beneficiaries will include workers on the nucleus estate and labourers on
smallholder plots. The characteristics of each group are:
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Smallholder farmers: Smallholders are both indigenes and earlier migrants to the
islands. Many are tenants or even squatters on large areas of land owned mostly
by absentee landlords. They are small subsistence fishermen but as fish stocks
are declining, they are increasingly turning to farming. With the high HIV/AIDS
rates on the islands, there are many single-parent households, farming small
pieces of land and cultivating mainly food crops, as well as keeping small
livestock. Current smallholders have typically established about 2-4 ha of oil palm,
although in some cases the area may be up to 10 ha, and are waiting for the trees
to mature.
Women and youth: Women may be engaged in the project in their own right as
landowners or tenants, as wives of landowners or tenants, or as plantation
workers. Issues include securing land tenure (particularly succession planning
given the 25 year period of oil palm), loans, inputs and skills development. Their
participation in the membership and leadership of grower organisations should be
encouraged. The youth in oil palm growing areas represent the future growers
and also need to develop skills in oil palm production. As members of smallholder
households, all would benefit from household planning and financial management
skills, succession planning and HIV/AIDS sensitisation.
Nucleus estate workers: Most of the plantation and crude palm oil mill workers are
migrants to the islands; they bring their own contributions to and demands from
the islands socio-economies. Their priorities range from technical (developing
skills in oil palm) to social (health and safety at work, safe accommodation of
acceptable standard; access to education, health and other basic services;
opportunity to settle in locality, if so desired; HIV/AIDS sensitisation) and
economic (equal opportunities in employment, pay and promotion; household
planning, savings and remittance mechanisms).
39.
Oilseeds. The principal target group under the oilseeds component will be
households cultivating, or wishing to cultivate, oilseeds crops (sunflower, soybeans,
groundnuts and sesame). Differentiated support will be provided to two sub-groups of
smallholder oilseed growers, based on their degree of commercialisation: new entrants to
sunflower growing and established semi-commercial and commercial sunflower/oilseed
farmers. Other actors in the value chain are especially the smaller rural intermediaries
who are recognised for potential support, including small scale input suppliers,
transporters, village processors and traders. The characteristics of the groups are
summarized below:
New entrants and oilseed smallholders in remote areas: These smallholders will be
located in more remote districts away from the Lira hub, and will have less well
developed commercial connections. These represent the entry level growers, and
are not found much nowadays in the core VODP districts, but in the former
conflict-affected districts in the north. Their main interests will be in developing
their farms and earning cash. While planting soft-shell open pollinated soft
varieties (OPVs) of sunflower and value addition through local processing may be
a good entry point, it is expected that they will progress quickly to hybrids where
earnings are higher. They require mobilisation into groups, and training in
leadership, household planning, gender empowerment; and HIV/AIDS
sensitisation and extension messages to address all aspects of production and
local processing.
Established semi-commercial and commercial oilseed smallholders: These farmers

use hybrid seed and are well connected to commercial channels. They are
confident enough to spend money on buying seed, and are generally located
where the commercial agents of the millers are operating. They are ready to
12

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intensify sunflower production (including applying fertiliser) or move to soybean,

and to engage in commercial activities such as bulking etc. The critical areas that
need to be addressed include the development of group action plans (GAPs) as
the next step PPM&E process; bulking, value addition, quality enhancement and
control, efficient production and oil extraction, mechanization of farm operations,
market access and enterprise diversification. They also need organisational
management and leadership training; skills in household planning, gender
empowerment and financial management skills; and HIV/AIDS sensitisation.
Other actors in the value chain. Other actors include seed breeders, multipliers,
suppliers, transporters, smallscale millers, larger processors and traders.
Targeting will be used to ensure that, while larger players are needed for the
commercialisation of oilseeds production and are important stakeholders in the
project, smaller (relatively more vulnerable) ones will be encouraged to upscale as
new opportunities are created. Identifying inequities within each stakeholder
group provides the starting point for consideration of targeting mechanisms that
can mitigate negative impacts of commercialisation on smaller-scale stakeholders
within each group.
Women and youth: Women may be engaged in the project in their own right as
heads of households or as wives. Roles in the value chain are frequently
differentiated along gender lines. Women are often the main agricultural
producers at the household level, but their degree of economic empowerment
varies and there is a tendency for men to reap more of the benefits as agriculture
becomes more commercialised. Women tend to be more involved in smaller scale
processing or transportation and the more local activities. Issues to address may
include securing land tenure (particularly for widows), loans, inputs, skills
development, household planning and financial management skills, and HIV/AIDS
sensitisation. Their participation in the membership and leadership of relevant
groups should be encouraged.
D. Targeting Strategy and Gender Mainstreaming

40.
By addressing categories of economically active poor defined above, the targeting
strategy places priority on ensuring that the target groups enjoy equality of opportunity
to participate in project activities, without excluding the better off farmers who will be
necessary to achieve economies of scale and industry competitiveness. Three types of
targeting mechanism will be employed: (i) enabling measures, to help create an
environment favourable to poverty reduction and gender empowerment; (ii) empowering
measures, to encourage people who have less voice and power to participate in groups;
and (iii) direct targeting measures, which involve channelling services or resources to
specific individuals or households.
Specific targeting and gender mainstreaming
strategies have been developed for the two components.
41.
Oil palm. The principal targeting mechanisms will include: establishing and
supporting effective oil palm growers Trusts to support development of smallholder oil
palm plantations; forming and strengthening smallholders units and blocks, including
training in PPM&E, record keeping and leadership training, raising awareness amongst
key stakeholders regarding the project and how poverty, gender and HIV/AIDS issues
are addressed within its activities; setting an upper limit of 5 ha of oil palm per
household eligible for support; provide feedback on the safety, health and welfare of
workers on the nucleus estate; and aiming at a minimum level of female and youth
participation in all activities (30 percent), and supporting HIV/AIDS sensitisation and
support for oil palm farmers and nucleus estate workers.
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42.
Oilseeds. The interests of poorer stakeholders associated with agricultural
commercialisation are threefold: (i) to improve their productivity and incomes; (ii) to
strengthen their position in the value chain; and (iii) to minimise exposure to risks. The
inclusive targeting approach will aim to ensure that the process of commercialisation
does not threaten the livelihoods of the rural poor, and women, youth and other
disadvantaged groups have equal opportunities to share in the benefits. Mitigation
strategies may be required to ensure fair and open competition for smaller chain actors.
Key elements of the targeting and gender mainstreaming strategy include on-going
definition of target group typologies during implementation to develop approaches
adapted to local socio-economic conditions and nuances concerning gender, HIV/AIDS
and environmental concerns, aiming at a minimum 30% of female participation/
membership in project supported activities.
E. Project Objectives and Outcomes
43.
Goal. The overall goal is to contribute to sustainable poverty reduction in the
project area. The development objective is to increase the domestic production of
vegetable oil and its by-products, thus raising rural incomes for smallholder producers
and ensuring the supply of affordable vegetable oil products to Ugandan consumers and
neighbouring regional markets. The project will achieve this by supporting farmers to
increase their production of crushing material (both oil palm and the four oilseed crops
sunflower, soybean, sesame and groundnuts) and establishing commercial relations to
directly link them to intermediaries and processors.
44.
Outcomes: The main outcomes for each component are summarised below, along
with the activities to achieve these outcomes:
Oil Palm Development: An integrated oil palm industry supplying national and
export markets in compliance with modern environmental standards and providing
equitable returns to smallholder producers.
o
Consolidation and expansion of oil palm- Kalangala District
Nucleus estate and smallholder oil palm establishment - Buvuma Island
Identification of new areas for oil palm development
Oilseeds Development: Continued up-scaling of Lira to a modern agro-industrial

hub for oilseeds and the emergence of three new hubs for oilseed (West Nile,
Eastern Uganda and Gulu) providing inputs to farmers and millers, with stable and
remunerative prices for farmers.
o
Seed production
Extension for farmer groups
Other value chain activities
45.
The project Logical Framework, Implementation Matrix and Organizational
Chart is contained in Appendix 5 and presents some of specific outputs for each activity.
F. Project Components
Oil Palm Development (Working Paper 4)
VODP2 will continue the partnership with OPUL in Kalangala District and will consolidate
the current gains in smallholder oil palm development while expanding the area covered
to the neighbouring outlying islands. A similar new oil palm development scheme will be
established on Buvuma Island, and new areas for oil palm development will be identified.
All areas where oil palm will be established will be subject to environment impact
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assessments under terms of reference agreed upon by NEMA. Working Paper 6.

Environment and Social Review Note discusses the environment. The specific activities to
support oil palm development are briefly discussed below.
46.
Consolidation and expansion - Kalangala. At the end of 2010, after five years
of development, about 87% of the initial objective of 10 000 ha of oil planting for the
nucleus estate and smallholders will be achieved, and the 10 tonnes per hour
(expandable to 25 t/hr) crude palm oil mill will be operational.
Smallholder consolidation and expansion. VODP2 will support the

development of an additional 2 000 ha of oil palm in Kalangala District, of which
800 ha will be developed by smallholders on Bugala Island to reach the initial
target of 3 500 ha, while an additional 1 200 ha will be developed on the four
neighbouring islands (Bunyama, Bubembe, Funve and Bukasa) to bring the total
area covered by smallholder oil palm plantations in the Kalangala District to 4 700
ha. For the outlying islands, the potential of each island to achieve a minimum
600 ha of smallholder oil palm plantations should be confirmed, and a sequenced
time-bound development plan to achieve the area targets by island will be
formulated by KOPGT and the concerned farmers, and OPUL will provide planting
materials and inputs at cost. A regular ferry barge service will need to be
established within five years after the first plantings to transport the FFBs to the
OPUL mill on Bugala Island. KOPGT will continue to provide financing to farmers at
the same terms and condition as under VODP.
Environmental Management. The plantation development techniques used by

KOPGT are exactly those used by OPUL and are thus compliant with RSPO criteria.
There will be no planting in protected areas, no burning of land, trees will be cut
and stacked along the contours and cover crop establishment to prevent soil
erosion, which also reduces farmers labour burden for weeding while increasing
nitrogen in the soil. KOPGT will play a more dynamic role in organising
environmental awareness campaigns among smallholder oil palm farmers and the
communities along the 200 m lake protective border about environmental
conservation. Woodlot planting for communities developing oil palm blocks will
also be supported.
Socio-economic support activities. Units and blocks will be the focal point for
farmer capacity building for conflict resolution, gender empowerment and
developing HIV/AIDS competency. OPUL will be requested to carry out a self-audit
on its compliance with efforts for gender and HIV/AIDS mainstreaming, including
compliance with health and safety rules at work.
Re-structuring and support to KOPGT. There is a need for an organisation to

be an intermediary between smallholder farmers and OPUL for the duration of
OPULs investment in Uganda (99 years). There is also a need for GoU to ensure
that repayments of the funds IFAD has provided as loans to smallholder farmers
for oil palm development on Kalangala are re-cycled to other smallholder farmers
in Uganda. Thus, there is a need to re-structure KOPGT so that its financing
functions are separated from its technical support functions. It is expected that an
Oil Palm Growers Trust of Uganda will be created and will manage the financial
assets which are currently managed by KOPGT, and that technical organisations
for working with oil palm farmers will be established in the geographical areas
covered by oil palm development.
Following upon the activities already being undertaken, VODP2 will continue to
finance KOPGT until 2016, and will also strengthen its field operational capacity to
expand smallholder development to the outlying islands and provide support for
the development of Buvuma. To be more performance-oriented, KOPGT will
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prepare a five year work plan with a detailed results framework including area
objectives, and the roles and responsibilities with the Kalangala Oil Palm Growers
Association (KOPGA). To put KOPGT on a sustainable financial basis, a 25-49 year
business plan will be developed, and this will include how the tasks of KOPGT will
change through the oil palm cycle, and what financial mechanisms put in place to
ensure its long-term financial sustainability, along with a formal mechanism put in
place for the re-cycling of farmer loan repayments to finance oil palm
development in other areas of Uganda.
47.
Nucleus Estate and Smallholder Oil Palm Development - Buvuma Island:
The Government and OPUL have reached tentative agreement to replicate the nucleus
estate smallholder model of Bugala Island on Buvuma Island. VODP will undertake the
Environmental and Social Impact Assessment in 2010 under terms of reference approved
by NEMA. The Government has initiated land purchases on Buvuma, and once GoU has
provided 6 500 ha of plantable land under leasehold to OPUL, OPUL will initiate
investments for the development of the nucleus estate. The establishment of the nucleus
estate will include the infrastructure required for the development of oil palm plantations
both by itself and smallholders, and will include nurseries for seedlings, warehouses for
input supplies, and a crude palm oil mill. With firm commitment by OPUL, VODP2 will
start field activities for smallholder plantation development on an additional 3 500 ha,
some of which may be on the mainland. It is expected that GoU will upgrade the ferry
barge service from the mainland in Mukono District to Buvuma Island. The principal
activities to be financed are:
Establishing Buvuma Oil Palm Growers Trust (BOPGT) and Buvuma Oil
Palm Growers Association (BOPGA). VODP has already started mobilising
work with farmers and this will continue with the onset of VODP2. The focus will
be on explaining the start of the investment process and will encourage them to
establish their own Buvuma Oil Palm Growers Association (BOPGA). Once the
leasehold land has been formally handed over to OPUL, another farmers financial
trust, Buvuma Oil Palm Growers Trust (BOPGT), can be registered under the Trust
or Cooperatives Act. The combination of having agreed on the technical aspects of
what is required for the development process for smallholders is expected to
greatly accelerate this process. During the course of farmer mobilisation, the full
model for smallholder development along with the nucleus estate will be
explained, with special focus on the linkage of the farmer oil produce pricing to
the world price for CPO. Salaries, office premises and logistic support will be
provided for BOPGT.
Planning and Implementation. With the experience gained on Bugala Island, it

is expected that the organisation and start-up of land preparation and planting will
be much smoother on Buvuma, and BOPGT will benefit from transfer of KOPGT
staff for the start up and management of these activities initially. BOPGT is
expected to start land development for smallholders in 2012. It will provide
technical guidance to farmers for land development, the same financing package
that KOPGT is currently providing (inputs purchased from OPUL and delivered to
farmer fields and labour payments when tasks are completed), and will be
responsible for all accounting of farmer loans.
Environmental and Socio-economic measures. The PMU will ensure that the
lessons learned from KOPGT are reflected right from the start in the training
messages used by BOPGT. Greater attention will be paid to ensuring that farmers
understand the reasons for implementing the full scope of measures for
environmental management and safeguarding, and the same themes that KOPGT
is working on for gender and HIV/AIDS mainstreaming will be replicated. The
same environmental monitoring mechanisms will be established for Buvuma.
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Identification of New Areas for Oil Palm Development

48.
Under the 2003 GoU-Bidco agreement, 40 000 ha of oil palm plantations are to be
developed, of which 26 500 ha for nucleus estate and 13 500 ha by smallholders. About
50% of this total target will be achieved with the completion of the investments on the
islands in Kalangala District and Buvuma Island by 2018. Under VODP2, the Government
will accelerate the process of land identification and hold detailed discussions with OPUL
about how and where the remaining land development can be achieved. The approach
will on a rolling basis, starting with more specific area identification of suitable areas,
collection of rainfall data, pilot oil palm trials to be carried out by the Coffee Research
Centre (COREC) which is responsible for oil palm research using seedlings from OPUL,
assessment of land availability for smallholders and the nucleus estate by the PMU, land
acquisition, farmer mobilisation and commitment, and plantation development.
49.
Once an area has been identified, VODP2 will undertake an assessment to
determine whether there is potential for replication of the nucleus estate-smallholder
model that has been used in Bugala and Buvuma. In the event that no tracts of land
which satisfy the current criteria for nucleus estate development are found, the PMU
should work on developing an alternative development model, which could examine the
feasibility of oil palm grown with supplementary water and an alternative model where
plantation development is limited to smallholders with OPUL continuing to provide the
technical services, inputs (seedlings and fertiliser) and primary processing facilities.
50.
Implementation Arrangements:
The PMU will work with district local
governments for smallholder oil palm development, to identify suitable areas for future
oil palm development, to build awareness about oil palm development and begin the
process of farmer commitment to participate in oil palm development. The PMU will also
continue its intermediation role on behalf of GoU with the private sector (Oil Palm Uganda
Limited - OPUL) including for the facilitation of land purchase for the nucleus estate and
the provision of the title deeds, the purchase of inputs (seedlings, agro-chemicals and
tools) from OPUL which are then provided by the Kalangala Oil Palm Growers Trust
(KOPGT) to smallholder oil palm growers. The PMU will be responsible for contracting and
completing the ESIA assessments in conformity with NEMA regulations prior to the start
of any new oil palm development activities. The PMU is responsible for ensuring that
gender, HIV/AIDS and environmental management awareness are mainstreamed in all oil
palm development activities, including the recruitment of female staff for interfacing with
farmers. The PMU will work with the Ministry of Works and InfraCo in order to finalise the
arrangements and financing for ferry barge transport for both oil palm development
areas. The PMU will also be responsible for the revision of current legal documents for
KOPGT as needed, and the preparation of new legal documents and their signature.
51.
Consolidation and Expansion Kalangala: Together with the PMU and
Kalangala District Local Government, KOPGT will continue its work with farmers to have
them commit their land for oil palm development, provide equipment and technical
support for land development, lining, holing, planting and subsequent maintenance.
KOPGT will be the intermediary for farmers with OPUL, and will continue to provide loans
in kind for inputs and in cash for labour to farmers during the first four years of
plantation development, and will be responsible for managing the transport and delivery
of FFBs to OPUL and receiving payment, and in turn making payments to individual
farmers after deduction of loan repayments. PMU will continue to be responsible for
direct payments to OPUL for the purchase of inputs during the project life, while KOPGT
will be responsible for the collection of the inputs from OPUL, their distribution to farmers
and accounting for cost to be included in farmer loans. KOPGT will be responsible for
making labour payments to farmers and also accounting for these costs in farmer loans.
KDLG and KOPGT will be responsible for achieving the land areas commitment targets for
the outlying island, and must obtain at least 500 ha per island in firm pledges for land
development from farmers before beginning any development support activities on the
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outlying islands. Once the commitment of smallholder land has been achieved, IFADs
approval will be sought prior to according any financing through KOPGT to establish
island satellite offices and initiate land development on the outlying islands.
52.
Re-structuring of KOPGT. The PMU will be responsible for recruiting appropriate
technical assistance to help KOPGT formulate its short- and long-term business plans,
delineate its role and responsibilities, and determine the mechanisms to ensure the
organisations long-term financial sustainability. The PMU will be responsible for the
preparation/amendment of the legal documents in conformity with the interim deadlines
which will be established together with IFAD during supervision to ensure that KOPGT is
able to assume the full financial cost of its operations by 2016, and to begin providing
loans to farmers using the repayments from older loans.
53.
Oil Palm Development - Buvuma: VODP is currently identifying land on
Buvuma Island for purchase by the Government Land Task Force and it is expected to
have purchased about 4 500 ha of plantable land out of a target of 6 500 ha by the end
of 2010. Under VODP2, the PMU will continue the process of land identification on the
basis of willing seller-willing buyer in order to achieve the full target. VODP has also
been working with the concerned local governments to pre-identify potential smallholder
oil palm growers, and will begin the process of sensitising farmers and mobilising them to
establish an association, and be organised into blocks and units for land development.
Once formal agreement with OPUL has been reached and the title deeds for the nucleus
estate have been provided by the Government, the PMU will be responsible for
establishing BOPGT, including finalising the legal documents (which will include a tripartite agreement like the one signed with KOPGT) as well as the recruitment of staff, the
provision of an office and computers and vehicles. Once established, BOPGT will begin
the process of obtaining formal land pledges from smallholders for oil palm development,
with technical backstopping provided by KOPGT.
54.
Identification of New Areas. Potential new areas have already been firmly
identified. The PMU, working through COREC, is responsible for carrying out oil palm
trials with seedlings provided by OPUL and ensuring that rainfall is monitored by the
concerned local governments. The PMU is also responsible for carrying out feasibility
studies to determine the potential areas available for development as nucleus estate and
by smallholders.
The PMU should also begin to examine options for smallholder
development without a nucleus estate, and the possibility of OPUL being able to provide
services and mill establishment for the purchase of FFBs for this type of development.
55.
Exit Strategy and Sustainability: Operational procedures for working with OPUL
have already been developed, tested and adjusted, and are included in private sectors
legal agreements with GoU which underpin the investment. These agreements clearly
specify the direct linkages between OPUL and KOPGT, and there is little scope for either
partner to defect because (a) OPUL needs crude palm oil to run its mill and refinery and
(b) there are no other options for farmers to sell their FFBs, except on-farm processing
which is very tedious. The operations of the committees to ensure equity for smallholders
and environmental monitoring (Service Price Panel, Impact Management System, and
FFB Pricing Committee) are already fully accepted by all parties and their meetings
should be considered routine business. Under VODP2, there is adequate time to carefully
work out the specific arrangements which should be applied to ensure the financial
viability of KOPGT in its technical support role for farmers, as well as in the operation of
the financial trust, and the re-cycling of funds to other areas for oil palm development.
IFAD funding for farmer loans ends in 2016, so there will be a two year period to test the
re-cycling mechanisms before project closure. Farmers on Buvuma Island will just be
finishing their last land development when the project closes, and it is foreseen that the
experience gained with Kalangala and the self-sufficiency of KOPGT (or a re-named
successor organisation) will have the capacity to ensure the sustainability of BOPGT.
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Oilseeds Development (Working Paper 5)

56.
Vegetable oil crops are largely grown as cash crops and require processing and
packaging between farm gate and consumer. Successful development of the sub-sector
must be based on strong private sector engagement in input supply, transport, milling,
refining and marketing. The agreement with the private sector for oil palm development
provides a sound basis for private sector engagement, but the downstream part of the
oilseeds value chain is much more fragmented and difficult to engage on a one-to-one
basis with the private sector. This calls for building stronger partnerships between
farmer groups and industry organisations representing stakeholders at all stages of the
value chain, as well as direct business relationships with intermediaries and millers.
57.
As long as farmers remain isolated from the expanding domestic and export
demand, due to the fragmented and disorganised links with private sector intermediaries,
they will remain poor. The instinctive approach of eliminating the middleman in
underdeveloped market chains often has the effect of accentuating economic isolation
and fails to recognise that intermediaries: (i) provide value adding services through
aggregation, transportation and grading; (ii) play a role in financing value chain
transactions; (iii) bear all of the commercial risk once they collect and pay farmers for
the produce; and (iv) are themselves affected by the high transaction costs and
inefficiencies in the market chain. Therefore, rather than attempting to restrict or
eliminate intermediaries, the project will seek to engage fully with them, address the
underlying causes of high transaction costs, remove barriers to entry in trading and agroprocessing, and forge stronger forward and backward linkages along the entire value
chain. The only way that farmers can receive better prices is by delivering higher
volumes of higher value quality products to end users, reducing costs and increasing
competition, and by creating the conditions in which price signals are transmitted back
down the value chain to the farm gate. These conditions will not evolve spontaneously
hence the need for a series of mutually beneficial and re-enforcing PPPs.
58.
Agricultural development initiatives in Uganda and elsewhere emphasised the
production, but now it is becoming clear that an integrated approach is required to
ensure processing and marketing. Farmers in Uganda have demonstrated that they are
responsive to commercial opportunities, as exemplified by the expansion of sunflower
and the recent upsurge in soybean production. Under VODP, the approach has been to
promote production and small scale processing by farmers. Under VODP2 the approach
will be to foster direct business linkages with value chain intermediaries in the value
chain, including millers to establish durable self-sustaining business relations. The value
chain approach aims at strengthening financial incentives so that technology adoption
becomes more affordable and spontaneous.
This can be done by addressing
inefficiencies in the marketing chain while building farmer knowledge and crop husbandry
techniques so that they get the greatest financial returns possible for the technology that
they are using.
59.
The market for oilseeds has changed tremendously over the past ten years, so
VODP2 will have a very different approach from VODP. With the recent investments in
large scale milling capacity and the construction of a solvent plant with a demand of
about 150 000 mt of crushing material, relative to actual production of about 70 000 mt,
farmers are assured of strong demand for their production of oilseeds, particularly
soybean. To concentrate resources and promote development impact, activities will focus
on four hubs, where there are good prospects for attracting additional private investment
in oilseed milling capacity. When oilseed production volumes in and around the hub area
reach a level where millers find it economically viable to establish buying centres and/or
local mills, they will eventually evolve into agro-industrial hubs, similar to Lira. This
approach is consistent with the GoU One-Zone-One-Product strategy and the strategy for
modernisation articulated under the DSIP.
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60.
There is a clear need for coordination between the various stakeholders in the
sub-sector and OSSUP has taken on the role of providing the platform where the
stakeholders can meet and decide how to work together. Active and dynamic
participation by the Project Management Unit (PMU) in OSSUP will be critical to
identifying the specific geographical areas and the specific support activities which will be
undertaken by VODP2 each year, and building the partnerships with the private sector
and other donors to put in place extension provision for smallholders. In coordination
with other donors and private sector operators, VODP2 will support farmers to increase
the volume of crushing material provided to millers through the support for: (a) seed
production and distribution; (b) extension for farmer groups; and (c) other value chain
activities. In some districts, or parts of districts, special initiatives may be needed to
address the needs of conflict affected households and communities.
61.
Seed Production and Distribution: Consistent supply of good quality seed of
varieties adapted to Ugandan conditions is key to increasing the production of crushing
seed. To improve the quantity and quality of seed available to farmers, three activities
will be supported:
Plant Breeding and Agronomic Research: The research and breeding

programmes by the National Semi-arid Resources Research Institute (NaSARRI)
and National Crops Resources Research Institute (NaCRRI) for sunflower,
soybean, sesame, and groundnuts will be strengthened to: breeding of improved
varieties with industry demanded characteristics; multiply foundation seed for the
distribution at a cost to seed companies and other interested stakeholders;
acquire new germplasm from other institutes and countries for future plant
breeding programmes; and contribute to the production of appropriate training
materials on best practices in oilseeds production and post-harvest handling for
the use of farmers and extension agents. Seed companies will also be encouraged
to import foundation seed and undertake multiplication.
Seed Multiplication and Distribution: The functions of seed multiplication and

distribution will be left to seed companies with MAAIFs seed certification service
supervising their activities. Each season (i.e. twice per year), OSSUP will convene
a seed industry meeting (including UOSPA, MAAIF, USTA seed companies, millers,
NGOs and other stakeholders) to estimate the amount of seed required two
seasons ahead, so that NaSARRI and NaCRRI can plan the production of
foundation seed and hybrid parent lines, and seed companies can schedule their
seed multiplication, seed imports, and distribution programmes.
Seed Quality and Certification: the National Seed Certification Service (NSCS)
under MAAIF will be strengthened to undertake its assigned role for quality control
and certification of the seed of the four main oilseed crops. VODP2 support will be
in the form of vehicles, finalisation of regulations for the Seed Act, seed testing
laboratory equipment, and funding of supervisory visits to seed multiplication
sites.
62.
Support for Farmer Groups: There are many farmer groups in rural areas
producing different commodities. NAADS provides extension support for three specific
crops (or activities such as poultry) each year, and this support changes from year to
year. When the farmers fora do not select oilseeds as an activity to be supported, then
oilseeds do not receive extension under NAADS. In order for smallholder farmers to
produce and upscale their production from oilseed crops, they require sustained technical
support for a three year period. To ensure that VODP2 and NAADS work in harmony at
the field level, VODP2 will conclude a Memorandum of Understanding with NAADS within
12 months of its start-up.
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63.
Following on from VODP, extension support for farmer groups using contracted
pay-for service providers will be the core activity for oilseeds development to increase
the production of crushing seed and link farmers with millers. The project will mobilise
new groups of farmers to produce oilseeds, as well as working with existing groups which
are already experienced in production. Groups will participate in the project for three
years, and will be trained and progressed upwards in the value chain. Non-oilseeds
producing farmers will become emergent farmers, while farmers who already are working
together in groups will be progressed into semi-commercial activities and eventually upscaled to being fully commercial. The project will support: group mobilisation and the
provision of technical advice (extension) for production, which will then be followed by
technical support for activities which lead to market participation and earning better
returns.
64.
VODP2 will work with stakeholders on extension themes specific to oilseeds in
order to have relevant and appropriate topics which will include sustainable land
management, while also ensuring that targeting emergent farmers and women are
incorporated in the extension approach. The project will lay emphasis on approaches
that promote production and improve productivity of sunflower and other oilseeds, while
addressing soil fertility issues. Modern husbandry practice and the use of improved seed
are prerequisites to ensuring high yield to the farmers. The project will develop relevant
technical messages on specific themes and design a communications strategy to deliver
the messages to target groups.
Farmer Group Mobilisation and Support: The approach will be based upon
carrying out activities in a clearly defined geographical area in order to promote
the emergence of the three new hubs and to build synergies with input supply
markets and millers. The entry point for the project will be the sub-county within
the hub area of the identified district. Groups will be supported to prepare Group
Action Plans (GAPs) for oilseeds development, and their implementation over a
three-year period.
Pay-For-Service Extension: In contracting pay-for-service extension providers,

VODP2 will interact with OSSUP, district agricultural officers and NAADS. PFS
providers will receive orientation training in order to harmonise and standardise
information and knowledge and to orient them to the expectations of VODP2.
Integration of Farmers into the Value Chain: The type of support provided to
farmer groups will be differentiated according to the stage of commercialisation.
In areas where the three new hubs are to be promoted, and where oilseeds are
relatively new, the emphasis will be on the basic technologies of growing the
crops which were promoted under VODP as the starting point for beginning to
raise the amount of crushing seed available. In the core VODP project areas,
where sunflower production is already an established part of the farming system
for the majority of rural households and input supply and marketing channels are
functional, support will focus on further commercialisation and integration of
farmers into the value chain. This will include a number of initiatives designed to
reduce transaction costs and add value to oilseeds and oilseed products at all
stages of the value chain. Measures may include, but not necessarily limited to:
farm mechanisation (including animal tractions with implements for conservation
agriculture and village level processing), bulking, access to financing, improved
post-harvest management and quality control, and obtaining market information.
Diversification into soybean will also be promoted.
Market Information. There is a rapid growth in the number of farmers owning

mobile phones.
In this context, it is suggested that oilseeds and the derived
products be added to an appropriate SMS-based market information service
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operating in Uganda, and the PMU will work with OSSUP to develop an agreed
upon communications capacity.
65.
Other value chain activities. Major constraints of oil millers are on the supply
side, related to the procurement of sufficient volumes of quality crushing material rather
than on the demand side related to output markets. In Northern Uganda, millers,
particularly the small/medium-sized operators, have limited working capital to finance
bulk purchasing and upgrading. Millers complain about the quality of crushing seed they
are receiving. This results in lower prices for the farmers and higher costs for the
millers. The quality of crushing seed is also problematic, and farmers need to have their
awareness raised about premature harvesting, inadequate drying and adulteration with
foreign matter. Similarly, there are also quality failures occurring in the smaller oilseed
mills and in the packaging, storage and transport of oil and by-products. Oilseed growers
around the Lira-hub have good access to information about competing buyers or agents
who are prepared to make offers for their crushing seed, but in the outlying areas,
farmers find it more difficult to identify buyers and establish a fair market value for their
produce. But, with the intense competition within the Lira hub, the larger millers are
already venturing out to other hub areas identifying farmer groups and bulking centres.
OSSUP has been hosting workshops for industry actors to assess the needs of the subsector and help coordinate their activities and OSSUP will continue to play this role.
Financing. Input suppliers, traders and small-medium-scale millers are also

constrained by lack of working capital which reduces the prices they are prepared
to pay to farmers, while farmers will need access to seasonal credit along with
longer term credit for investment in animal traction and other equipment for area
expansion and raising productivity. Two financial institutions are interested in
developing specialised financial products for oilseed value chain actors, but there
are substantial risks associated with climate viability and the clientele to be
supported. USAID is supporting the oilseeds sector and has expressed an interest
in collaborating with IFAD and has proposed the development of a guarantee fund
as an incentive for financial institutions to provide funding. To put in place such a
fund, it is expected that 2-3 years of work will be needed with the identified
institution to develop the specific modalities and procedures. IFAD will be further
exploring this option with USAID and has currently earmarked funding under the
IFAD loan for this activity. The current thinking is that the guarantee fund should
protect financial institutions from weather-related risk.
Quality Improvement. In order to address these issues, VODP2 will continue

the partnership with UNBS which has been involved in the development of a
number of standards for vegetable oil products and increasing awareness of
standards and quality assurance systems in the milling industry. VODP2 will
provide support to UNBS in the form of: (i) a vehicle, computers and laboratory
equipment; (ii) a workshop for key stakeholders to review the standards; (iii)
preparation of guidelines for trade, processing and enforcement of standards; (iv)
preparation of publicity materials; (v) routine inspection and monitoring visits;
(vi) training for municipal staff, farmers, traders and millers; and (vii) additional
training for UNBS officers in analytical techniques.
IFAD grant support to OSSUP. SNV is currently hosting the OSSUP platform
and is expected to continue to do so for another five years or more. IFAD will
provide a grant directly to SNV to support OSSUP activities for coordination,
knowledge management, and policy advocacy.
66.
Implementation. The PMU will participate regularly in OSSUP workshops, which
will provide the mechanism for linking up with industry groups and other donors. On the
basis of the information and needs articulated under the OSSUP platform, the PMU is
expected to take a lead role in identifying the key extension themes each year by hub
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area, the content of the extension to be provided and the training techniques to be used
with farmers. Helping stakeholders in the oilseeds sub-sector estimate the demand for
seed for the following crop year is one of the areas where OSSUP should bring together
stakeholders, to help them coordinate the requirements of millers and estimate the
requirements for sunflower and soybean. The PMU should participate in these discussions
to know which oilseed crop should be prioritized for the following year, and what type of
seed is required. It is expected that NAADS will participate in the OSSUP forums, and will
articulate what its expected role will be, so that this will facilitate coordination between
VODP2 and NAADS.
67.
Seed Production. With information developed by stakeholders under the OSSUP
platform, NaSARRI and NaCRRI with technical backstopping from the PMU should be able
to determine the quantity of foundation seeds and hybrid parent lines that they can
reasonably produce for sale to seed companies. If seed is available for multiplication, it is
expected that seed companies will take up the opportunities of multiplication and the
seed produced will be certified by the National Seed Certification Services (NSCS) of
MAAIF, for sale to agro-dealers and other input suppliers. If NaSARRI and NaCRRI are
unable to meet the seed needs, then solutions should be agreed upon to ensure
adequate supply of good quality seed to farmers.
68.
Extension for Farmers. The PMU will be responsible for the identification of
extension themes each year, the preparation of terms of reference for the competitive
process to establish a short list of qualified firms (millers, seed companies, other
operators including NGOs) which can be contracted to provide extension services in the
four hubs. The selection of firms will be based on those which can be expected to
establish direct business linkages between farmers and the concerned operators, so that
they can be expected to assume responsibility and financing for the provision of
extension at the end of the project period. The contracted firms are expected to provide
some sort of cost sharing, and will deliver extension for training of farmers in agricultural
technologies including the use of inputs, farming as a business, bulking/post harvest
management, and mechanisation. For ease of contract management and monitoring by
the PMU and hub coordinators, effort will be made to bulk the procurement of extension
services by hub or even region. Service providers will be responsible for providing reports
to the PMU about the numbers of farmers benefiting, the success and challenges faced,
along with any other issues. It is recognised that cost sharing for contracted extension
provision in more remote less secure hub areas may be difficult. In order the address the
risk that no provider may be available, district agricultural staff may be used and/or
collaboration with NAADS. More details about the timing of contracting and its content
are provided in Working Paper 5. The PMU is responsible for ensuring that gender,
HIV/AIDS and environmental management awareness are mainstreamed in all oilseed
extension activities, establishing targets for the recruitment of female staff pay-forservice providers.
69.
Other Value Chain Activities. IFAD will provide a grant to SNV to support
OSSUP to continue its current coordination and stakeholder consultation activities,
including the development of a long term competitiveness strategy for the sub-sector.
Through the OSSUP platform, the PMU will work with other donors and financial
institutions in order to put in place a loan guarantee fund to mitigate the risk associated
with weather viability for financial institutions using their own funds to provide credit to
farmers for investments to raise productivity and credit to small millers. The provisions
for the loan guarantee fund will be submitted to IFAD for approval prior to disbursement.
The PMU will continue activities started with UNBS under VODP for quality control and
enhancement for vegetable oil.
70.
Exit Strategy and Sustainability: With regards to seed production, research
institutions do, have a key role to play in plant breeding and agronomic research, but this
will only be sustained if they receive, and are permitted to retain, payment for foundation
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seed and hybrid parent lines, from the seed companies. If within five years no progress is
achieved in increasing the supply of domestically produced oilseed varieties, there should
be clear recognition that Uganda will import seed and mechanisms should be put in place
so that seed companies are able to ensure the availability of viable seed at the right
time. With regard to extension, in the Lira hub, it is expected that private service
providers will be interested in providing extension on a cost-sharing basis as a means to
maintain commercial relations with farmers. After three years, the concerned farmer
groups will either maintain their relations with the provider or they will seek to establish
similar business relations with other millers. This process has already been noted under
both VODP and APEP: as farmers and farmer groups gain skills, they no longer feel the
need for participation in extension. With regard to financial institutions which have
benefited from the loan guarantee fund(s), they will have gained experience in managing
the commercial risk associated with oilseeds production and should be able to take their
own loss provisioning measures.
Project Management
71.
Project Management Unit:
The PMU will be staffed by ten qualified
professionals: a Project Manager, Financial Controller, Oil Palm Coordinator, supported by
a professional for land and institutional issues; Oilseeds Coordinator supported by a
professional for extension; Credit and Finance Officer, Monitoring and Evaluation
Specialist; Procurement Specialist and Communication Officer. Support staff will include
two secretaries, an administrative assistant, accounts assistant, procurement assistant,
and five drivers. There will also be four coordinators based in the hubs, each supported
by a general office assistant and a driver. All PMU positions (both professional and
support staff) will be filled through competitive recruitment with advertisements through
national media with job descriptions and necessary qualifications once these have been
approved by IFAD. Short-listed candidates will be interviewed by a selection panel that
will be set up by the GoU in consultation with IFAD. All staff recruitment and contract
renewals will be subject to prior approval by IFAD. The PMU will be located in an office in
Kampala large enough to adequately accommodate its officers, with necessary office
equipment and vehicles. Hub Coordinators will be located in the hubs in simple offices
with two computers and a vehicle.
72.
Exit Strategy and Sustainability: The exit strategy for the PMU will be to wind
down its activities during the final two years of the Project and re-integrate its functions
within the private sector and where necessary in Government institutions.
VI. IMPLEMENTATION ARRANGEMENTS
A. Organizational Arrangements and Project Management
73.
The Ministry of Agriculture, Animal Industry and Fisheries (MAAIF) will be the lead
ministry for VODP2. MAAIF will work with other line ministries and government agencies
as needed to provide the necessary support to ensure a smooth and effective project
implementation.
74.
The Project Management Unit (PMU) will have the following broad responsibilities:
Work with the other line ministries and government agencies as required for
ensuring smooth project implementation;
Manage project activities and IFAD loan funds in accordance with IFADs General
Conditions;
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Continue its intermediation role on behalf of GoU with the private sector (Oil Palm
Uganda Limited - OPUL) and the Kalangala Oil Palm Growers Trust (KOPGT) and
Buvuma Oil Palm Growers Trust (BOPGT) to smallholder oil palm growers;
Continue its supervisory role for the management of IFAD funding provided
through KOPGT and BOPGT for oil palm development and through an agreed upon
financial institution for a guarantee fund to mitigate weather related risks; or any
successor organisation to farmers for oil palm development;
Take a leadership role as an OSSUP participant for the coordination and linking
with all stakeholders and donors in the oilseeds sub-sector, and bring oil palm
processors into the platform;
Contract and manage pay-for-service extension providers for oilseeds production

aimed at promoting business linkages between the private sector (millers and
input suppliers) and farmers, while ensuring that the targeting mechanisms for
inclusion of women and youth and HIV/AIDS understanding are addressed.
75.
The PMU will have operational responsibilities to:
Prepare AWPBs for the project and submit them to MAAIF and IFAD for comments
and approval;
Disburse and control the flow of funds for various contractual and partnership
agreements, and ensuring the timely submission of justification documentation for
the smooth flow of funds;
Undertake national and international competitive bidding for procurement of civil

works, goods and services (including extension) in a timely fashion as required for
effective project implementation;
Promote integration at the group level by service providers and team building
among farmers for integration of activities along the oilseeds value chain;
Develop extension messages for key areas to raise production and farmer income
and select the service providers;
Develop and implement a communication and knowledge management strategy;
Manage for performance all activities under the project;
Implementing reporting based on a participatory M&E system; and
Submit project implementation progress and financial reports to IFAD and GoU in
a timely manner.
76.
Project Steering Committee (PSC): The Vegetable Oil Development Council
(VODC) will be renamed Project Steering Committee (PSC) and will have responsibility
for providing overall guidance for project activities. The PSC will be chaired by MAAIF,
and will have member representatives from NARO, MFPED, OPUL, large scale oilseeds
millers, OSSUP, as well as representatives from two farmers organisations such as
Uganda National Farmers Federation (UNFFE) and the Uganda Oil Seed Producers and
Processors Association (UOSPA). The PMU will be the Secretariat for the PSC. The PSC
will meet once every six months to review all project reports and Annual Work Plans and
Budgets. Working Paper 7. Project Implementation lays out how the project will be
executed.
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B. Transition and Start-up

77.
In order for there to be no interruption of the funding of activities at the farmer
level, particularly for oil palm development on Bugala Island and to ensure a seamless
transition with VODP, which is scheduled for completion at the end of 2011 with closure
six months later, VODP2 has been designed to start physical implementation by mid-June
2011. A series of activities have been agreed upon between VODP and GoU to ensure
that certain activities are completed under VODP as preparation for VODP2 and the key
ones are summarised below:
78.
Oil Palm Development: Given the need to ensure a smooth start-up of further
investments for the second phase of oil palm development, the following key issues are
being followed up:
Continue purchasing land on Buvuma Island to achieve the target of 6 500 ha

(plantable area) to be provided to OPUL;
Contract for carrying out the ESIA for Buvuma (including an aerial survey) under
terms of reference approved by NEMA, so that a request for the NEMA certificate
can be made promptly once the target area of 6 500 ha has been purchased;
Initiate work for obtaining land pledges from smallholders for the development of
the outlying islands in Kalangala District;
Continue discussions with InfraCo for upgrading/establishing ferry barge service

both for Buvuma and the outlying islands in Kalangala;
IFAD has provided consultant support to improve accounting by the PCO, and a
computer accounting package has been purchased in November 2009, and the
project has started recording all expenditures using the new software; and
VODP has done substantial work on its public relations for oil palm development and
this needs to be continued and sharpened, so IFAD has financed a communications
officer from OSSUP to work with the PCO on communication issues during the
transition period and for project start-up.
79.
Oilseeds Development: As most activities for oilseeds have already been
substantially scaled back, it has been agreed that the project will:
Phase out support to more mature farmer groups, and direct project expenditures
only to the areas within the four hubs;
Explore options with different NGOs and private sector operators to takeover the
ongoing work for commercialising activities for essential oils; and
Continue to work with NaSARRI and NaCRRI for the prompt release of new
sunflower hybrids and soybean varieties for local multiplication and eventual
onward sale to farmers; and
Begin to inform stakeholders (as has already happened at the national workshop of
the Interim Evaluation report) of the industry competitiveness approach under
VODP2.
80.
VODP2 Implementation Guidelines: The project will have separate guidelines
for oilseeds and oil palm development, and a project operations and financial
management manual so that PMU staff has clear information to guide service providers
about the procedures which will be followed, as well as providing a transparent
framework for personnel management. It is expected that the component guidelines will
include: a description of the activities to be financed; the implementation arrangements
including the roles and responsibilities for partners; the criteria for selecting farmers and
farmers groups; the targeting mechanisms which will be used, along with the cross
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Main Report
cutting themes to be addressed (gender and HIV/AID); and general information about
financial and physical reporting requirements of implementing partners and contractors.
To lay out roles and responsibilities and to guide implementation, the project will submit
to IFAD for its prior approval by December 2010 the following documents:
Guidelines for Oil Palm Development;
Guidelines for Oilseeds Development;
Project Operations and Financial Management Manual.
81.
Hub and District Launch Workshops: VODP2 will be promoting a business and
performance-based approach for all activities. While this approach has been quite well
articulated for the oil palm component, for oilseeds development this message should be
communicated at project launch and start-up to help project partners, districts,
collaborating institutions and the private sector to understand the change and develop
new attitudes. Hub and district launch workshops will be held for the oilseeds component,
to explain the new business orientated approach, and the opportunities it offers. The
roles and responsibilities of stakeholders, and how the project will work with NAADS and
contract pay-for service providers will be explained.
82.
The launch workshops will include presentations on the new business orientated
approach of the project and the aim of establishing direct commercial relations between
farmers and processors, while also incorporating measures to address cross-cutting
issues which affect farmers like declining soil fertility and the need for sustainable land
management, gender and HIV/AIDs. To complement the communications aspect of the
launch workshops, the PMU may also formulate communications messages for
dissemination on national radio, newspaper articles and brochures and, for the district
launches, through radio programmes, posters and leaflets in the local languages.
83.
Annual Work Plans and Budgets, and Annual Reviews: The PMU will prepare
Annual Work Plans and Budgets (AWPBs) which will serve as the basis for project
implementation planning and progress monitoring. The project will be implemented in
accordance with the Government fiscal year. It is IFADs and the GoUs objective to have
a seamless transition between VODP and VODP2. Competitive recruitment of all PMU staff
should be started not later than 15 September 2010, to be completed by March 2011.
The first AWPB for VODP2 should be submitted to IFAD by 1 April 2011 for the 2011/12
fiscal year.
C. Phasing of Project Implementation
84.
Oil Palm Development: The phasing of implementation in the oil palm
component is linked to the planting schedule as shown in the table below. On Bugala
Island, no further nucleus estate planting is expected from 2010 onwards, leaving the
estate at around 6 050 ha. Smallholder plantation development under VODP will be
completed for the lands currently pledged by farmers, and after 2011 financing will be
provided by VODP2 for further development on both Bugala and the outlying islands.
The development of Buvuma Island is expected to start in 2011 under VODP2, with
preliminary activities being carried out currently by VODP. On Buvuma Island, the 6 500
ha of the nucleus estate is expected to be developed over five years between 2012 and
2017, with smallholder plantings reaching about 3 500 ha over the same period but at a
slower pace. This planting schedule will see total oil palm plantation development in both
areas reach 22 250 ha by 2017, and peak production of palm oil will be achieved in 2025.
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Table 1. Area Targets for Oil Palm Development
Bugala
Island
Kalangala
Outlying
Islands
Buvuma
Island
Total
Uganda
Area planted
Nucleus
Cumulative area
Estate
Smallholder Area planted
Cumulative area
Area planted
Nucleus
Cumulative area
Estate
Cumulative area
Area planted
Nucleus
Cumulative area
Estate
Cumulative area
Area planted
Nucleus
Cumulative area
Estate
Cumulative area
Area planted
All Oil
Cumulative area
Palm
End 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
500 300 450
5 300 5 600 6 050 6 050 6 050 6 050 6 050 6 050 6 050 6 050 6 050
200 700 800 400
400
1 200 1 900 2 700 3 100 3 500 3 500 3 500 3 500 3 500 3 500 3 500
500
5 300
200
1 200
700
6 500
300
5 600
700
1 900
1 000
7 500
450
0
6 050 6 050
800 400
2 700 3 100
1 250 400
8 750 9 150
400
400
400
400
800 1 200 1 200 1 200 1 200 1 200
1 300 1 300 1 300 1 300 1 300
1 300 2 600 3 900 5 200 6 500 6 500 6 500
500
800 1 300 1 200 1 200
500 1 300 2 600 3 800 5 000 5 000 5 000
1 300 1 300 1 300 1 300 1 300
0
0
7 350 8 650 9 950 11 250 12 550 12 550 12 550
1 300 1 200 1 700 1 200 1 200
0
0
4 400 5 600 7 300 8 500 9 700 9 700 9 700
2 600 2 500 3 000 2 500 2 500
0
0
11 750 14 250 17 250 19 750 22 250 22 250 22 250
Oilseeds Development: VODP has supported some 6 000 farmer groups of which
about 1 200 will be active at the time of transition from VODP to VODP2. VODP2 will
support 1 200 farmer groups in year 1, up to a maximum of 2 000 groups at any time.
Each group will be supported for three years before graduating out of the programme. A
total of 5 900 groups will be supported over the life of the project representing around
136 000 farm households.
Table 2. Area Targets for Oilseeds Development
Physical Summary
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8
New Districts added
5
5
4
No of Districts engaged
28
33
37
37
37
37
37
37
No of Sub-Counties engaged
200
250
300
300
300
300
300
300
Year 1 Farmer Groups
1200
900
900
1200
900
900
400 1200
900
900
1200
900
900
0
400
400 1200
900
900
1200
900
900
Graduated Farmer Groups
400
800
2 000
2 900
3 800
5 000
5 900
Total No of Farmer Groups
2 000 2 500 3 000
3 000
3 000
3 000
1 800
900
Households/Farmer Group
20
20
20
20
20
20
20
20
Total Benefciary Households
40 000 50 000 60 000 60 000 60 000 60 000 36 000 18 000
Cumulative Beneficiary Households 40 000 58 000 76 000 100 000 118 000 136 000 136 000 136 000
D. The Collaborative Framework and Operational Partnerships

85.
Collaboration with NAADS. NAADS is a participant in the OSSUP platform and is
already working with millers relative to extension for oilseed crops. NAADS2 is currently
under formulation and will be co-financed by IFAD. During the first year of
implementation (probably starting in mid-2011) and within the context of the
requirements of millers and the needs of farmers, VODP2 will conclude a Memorandum of
Understanding with NAADS so that both projects work in harmony at the field level.
86.
Coordination with donors. The principal mechanism for linking up with other
donors will be through the OSSUP platform and bilateral discussions with other individual
donors such as USAID and Danida funded projects. The area coverage and approach for
the contracting of extension service provision by VODP2 may be adjusted to reflect the
area coverage under other programmes (including NAADS), and to the extent possible
VODP2 will harmonise its extension approach with that of the different players. With
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Main Report
regard to putting the weather risk guarantee fund in financial institutions, the PMU will
work with other donors (probably USAID) in order to put in place the parameters which
will be applied, and these will be submitted to IFAD before any disbursement from the
loan.
87.
Collaboration with private sector partners.
A formal public-private
partnership arrangement has been established with OPUL for oil palm development, and
the project has specific responsibilities and activities to fulfill the Governments
responsibilities. The partnerships which will be established under the oilseeds component
will be different, as the project will be establishing direct business linkages between
millers and farmers. In order to support this process, it may develop that specific
operational or collaboration agreements with private sector operators are needed, beyond
the contractual relationship relative to extension provision for oilseeds. The PMU is
expected to take the initiative in forging these types of partnerships, and formalising
them.
88.
Modalities of providing funding to Government partners. For VODP2
financed activities with the three NARO research institutions (NaCRRI, NaSARRI and
COREC), a two-year rolling work plan will be developed each year with clear performance
objectives in terms of delivery of foundation/parent lines for multiplication by seed
companies and palm trials and formally agreed to. In order to ensure that NARO gives
adequate attention to research and trial issues for oilseeds, VODP2 will sign a
Memorandum of Understanding with NARO about the time-bound deliverables from the
three institutes, along with individual performance contracts with the concerned institute.
In the event that the planned deliverables are not achieved, it is expected that the subsector institutes will import the required varieties and funding for these activities under
the project will be terminated. If COREC is unable to manage oil palm trials using
materials provided by OPUL, PMU should find another pragmatic solution. Funds to be
provided to NSCS for certification and to UNBS for quality control will be based on a twoyear rolling work plan which will be developed each year with clear performance
objectives. If these activities are no longer relevant, then funding will no longer be
provided.
E. Results-Based M&E
89.
Monitoring and Evaluation (M&E) will be an integral part of VODP2 under the
PMU. A detailed design of the M&E system and baseline studies will be undertaken in
Year 1. These will be fully compliant with IFADs Results and Impact Management
Systems (RIMS) and consistent with the implementation arrangements explained in the
component guidelines. Elements of the M&E system, developed and tested under VODP,
will be adapted and incorporated in the new design. M&E tools, including the log-frame
matrix, reporting formats, planning and review guidelines, M&E surveys, beneficiary
assessments, and simple databases for recording of physical progress will be used. The
system will be based on the following principles:
Project Performance: this will be monitored through the recording of completed

outputs, such as training sessions, farmer group formation, demonstrations and
construction of facilities against those planned. Direct results of activities will be
included in output M&E. Project performance monitoring will provide insight in the
lower level indicators of the Results Framework. Information flows will be linked
to financial flows. Information requirements will be kept minimal and functional
and the generally available software, such as Microsoft Excel and Access, will be
used.
The performance monitoring system will provide some early-stage
indicators of performance to be used in the mid-term review;
Project Impact, providing insight into the higher level indicators of the Results
Framework, will be evaluated through specific impact studies. These will be
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devised by the M&E Specialist of the PMU and consist of baseline and follow-up
surveys and case studies for specific Project interventions, related, as far as
practicable, to some of the RIMS indicators and to some broader aspects, such as
household income and asset status. Specific studies will assess the situation with
respect to number of beneficiaries, vegetable oils production and consumption,
contribution to import substitution, milling capacity and utilisation, and the overall
impact of the Project.
90.
Learning will be an essential element of the M&E system, and will provide input to
the annual and quarterly planning and review meetings. Documentation of best practices,
challenges, outcomes and impact at all Project levels will be undertaken as part of the
routine M&E activities.
91.
Progress Reports: The project will submit to GoU and IFAD quarterly progress
reports and a comprehensive annual report in an acceptable format. The reports will
include key qualitative and quantitative information, a review of incremental progress,
description and analysis of achievements against targets, staff movements, training
courses undertaken, procurements, and a highlight of the challenges encountered during
the course of the project year. Annual reports will reflect annual and cumulative progress
against targets, conformity with the implementation schedule, compliance with the legal
agreement and financial management information including reconciliation of the project
accounts.
92.
Mid-term Review and Completion Reports. In order to assess the business
oriented approach and to have time to introduce adjustments, MAAIF will prepare, and
submit to IFAD, a draft mid-term report within 30 months after the declaration of loan
effectiveness.
The report will assess the progress towards achieving the physical
objectives of the project and the challenges encountered, and recommend any
reorientation as may be required. The mid-term report will, in turn, serve as the basis
for IFADs mid-term review no later than 36 months after the declaration of loan
effectiveness. The PMU will prepare and submit to IFAD the project completion report, in
an acceptable format, no later than six months after the project completion date.
VII. PROJECT BENEFITS, COSTS AND FINANCING

A. Benefit Analysis and Impact
93.
VODP2 will support development of the vegetable oil sub-sector over the eightyear implementation period.
The economic rationale for VODP2 is based on: (i)
production of oil palm as an import substitute; (ii) doubling of the production of oilseed
crops with a move to expanding production of soybean, through increased productivity
and area planted using proven, simple and affordable technologies; and (iii) the
extension of technologies to add value through simple processes, such as drying, grading
and aggregation to improve bulking and collection and raise farm gate prices. Attractive
financial and economic returns are generated by both crops through the adoption of a
package of best practices in production, value addition and marketing, in partnership
with the private sector service providers, input suppliers and market intermediaries.
Even partial adoption, a more likely outcome in the short term for oilseeds, generates
robust financial and economic returns.
94.
Direct Beneficiaries. A total of about 139 000 farm households (representing
about 834 000 people) are expected to benefit from the project. Two main groups will
benefit from these measures: farmers and consumers. The project will help around 3 000
rural households become oil palm smallholder growers, and about 136 000 households
who have a member participating in growing sunflower/ soybean. Consumers will benefit
from locally produced vegetable oil and soap products at competitive and affordable
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Main Report
prices, while other market intermediaries (stockists, traders, transporters, millers,

exporters, service providers) will see their businesses grow.
95.
Indirect beneficiaries. For oil palm, the nucleus estate employs about 2 000 unskilled and semi-skilled workers, and this will double under VODP2. Smallholder farmers
also hire labour to supplement their own efforts, although these numbers are difficult to
quantify. For oilseeds, the improved production packages are more input intensive than
traditional production systems, and will also increase the demand for hired labour in the
project areas, creating increased employment opportunities and better wages for the
very poor who often depend on casual labour as their principal source of livelihood. The
substantial investments already made by large scale private millers in the Lira area have
created a secure market for farmers production and are increasing the opportunities for
employment along the value chain, although the type of occupation is changing as the
sector modernises. The potential knock-on benefits from the wage impact have not been
valued in monetary terms in the economic analysis. There are also secondary benefits to
stimulating other industries, particularly animal feeds industry in the case of soybean
meal. The economic analysis undertaken is at the smallholder primary producer level
before value addition through the value chains.
96.
Community Impact. The social impact of oilseeds development is expected to be
overwhelmingly positive, with key benefits arising from the orientation, training and
learning processes involved in working with farmer groups. This will lead to a closer
integration of rural communities with the commercial environment. Whilst the project is
focused on addressing the needs of the rural poor, it will also engage with a number of
other private and public sector organisations, ranging from micro, small and mediumsized rural traders to agribusiness companies, financial institutions, central and local
government organisations, parastatals and NGOs. The concerned communities will
benefit from community access roads built with funds from other projects financed by
IFAD, as well as ferry transport developed under VODP2. Farmer groups which no longer
need extension support and have graduated to working directly with private sector
processors will bring increased income to their communities.
97.
Tax Revenues. The project will generate incremental tax revenues for District
and the central Government through increased volumes of taxable production and a
higher level of economic activity. The availability of these financial resources at local
government level will permit increased expenditures on rural roads, health, education
and other social services to improve the quality of rural life. At the central government
level, while the nucleus estate benefits from the tax exemption accorded to all large scale
direct foreign investment based outside of Kampala, the taxes paid by Bidco on the
revenue earned from the operations of the Jinja refinery has made it the 17th most
important taxpayer in Uganda in 2008, providing the Government with more than
USD 15 million in revenue each year.
98.
Oil Palm. Oil palm production is particularly profitable and the financial analysis
shows attractive returns to the smallholder. The crop generates net income of around
UGX 4 million (USD 1 900) per hectare per year when it reaches full production in year
10. With the application of the recommended cropping technology and the assured sale
to OPUL at the world market determined import parity price, the income generated from
2 hectares of oil palm will lift benefiting households out of poverty. Another important
unquantified benefit is the reduced need for vegetable oil imports when oil palm reaches
full production on the 20 000 ha to be planted by the private sector and smallholders.
About 85 000-100 000 tonnes of crude palm oil will be produced each year in Uganda,
and this will go a long way to making the country self-sufficient in vegetable oil
production. This will reduce the need for imports at an estimated foreign exchange value
of about USD 55-70 million annually.
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99.
Oilseeds. With the construction of a solvent plant in Lira along with increased
expeller capacity for sunflower and capacity utilisation at less than 50%, farmers are
assured of a ready market for their oilseeds production for the foreseeable future.
Production models for soybean and sunflower have been prepared using three levels of
technology; traditional, use of improved/hybrid seed alone, and use of improved/hybrid
seed with fertiliser. Using hybrid seed with no fertiliser, a typical household growing 1 ha
of sunflower earns about USD 195, while growing 1 ha of soybean with improved
varieties brings about USD 366. There is also the option of moving to a higher level of
technology by using both hybrid/improved seed and fertiliser, which has the potential to
increase the gross margin per ha to USD 332 and USD 550 respectively.
Most
smallholder farmers are not prepared to take this step at present because of the
perceived risks and their lack of familiarity with fertiliser use, and its cost, which is
considered high, so only 15% of farmers are estimated to take up this package.
100. The economic analysis has been undertaken using the benefits from the financial
analysis of the oil palm and the two oilseed crops and it indicates that the project will
have a strongly positive economic impact. The net returns to the smallholder oil palm
component over 25 years is expected to generate an economic internal rate of return of
around 18%, with the international price of crude palm oil (CPO) at USD 850/tonne,
which drops to about 14% at the current price of CPO at USD 640/tonne. The oilseeds
crops component indicates an economic internal rate of return of over 24% when only
taking into account sunflower, with only 35% of farmers adopting productivity raising
technology. If half of the farmers adopt soybean under the same assumptions, the
economic rate of return more than doubles because of the price differential and the
incrementally better yields. The economic rate of return of the project as a whole is in
the range of 19-25% and relatively insensitive to cost escalation, benefit reduction and
implementation delays. The strong ERR arises from the very low base at which oilseed
production is starting and the relatively high returns to oil palm, both of which will be
sustained on the basis of commercial incentives for all participants, rather than
continuing to require outside funding from Government or donors. There are also
substantial indirect benefits which have not been included in the economic analysis and
these include household and village level processing as well as increased informal
transport and trade in rural areas.
B. Summary Costs
101. Total Project Costs. Total investment and recurrent costs, including
contingencies, are estimated at USD 147.2 million (UGX 294 billion). Foreign exchange
content is around 36%. Table 3 below shows a breakdown of the costs of the three main
components and their sub-components. The Oil Palm Development component costs
about USD 111 million and accounts for 81% of total base costs because of the inclusion
of USD 70 million in financing from the private sector, followed by the Oilseeds
Development at 13% of base costs and Project Management at 6%.
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Table 3. Project Cost Summary

(UGX Billion)
Local
Foreign
Total
A. Oil Palm Development
1. Consolidation and Expansion - Kalangala
2. Development - Buvuma
3. Identifiction of New Areas
Subtotal Oil Palm Development
B. Oilseeds Development
1. Seed Production
2. Extension for Farmer Groups
3. Other Value Chain Activities
Subtotal Oilseeds Development
C. Project Management
1. Project Management
Subtotal Project Management
Total BASELINE COSTS
Physical Contingencies
Price Contingencies
Total PROJECT COSTS
(USD Million)
Local
Foreign
Total
%
% Total
Foreign
Base
Exchange Costs
24.8
101.8
1.2
127.8
9.8
85.3
0.2
95.3
34.6
187.1
1.3
223.1
12.4
50.9
0.6
63.9
4.9
42.7
0.1
47.7
17.3
93.6
0.7
111.5
28
46
14
43
13
68
81
3.2
24.2
6.0
33.3
0.9
1.5
0.3
2.7
4.0
25.7
6.3
36.0
1.6
12.1
3.0
16.7
0.4
0.7
0.2
1.3
2.0
12.8
3.2
18.0
21
6
5
7
1
9
2
13
13.2
13.2
174.3
8.1
7.4
189.8
4.2
4.2
102.2
0.7
1.7
104.7
17.4
17.4
276.5
8.8
9.1
294.5
6.6
6.6
87.1
4.0
3.7
94.9
2.1
2.1
51.1
0.4
0.9
52.3
8.7
8.7
138.3
4.4
4.6
147.2
24
24
37
8
19
36
6
6
100
3
3
106
102. Of the total financing package of USD 147.2 million, IFAD is expected to provide
USD 52 million in new loan funding on highly concessional terms to GoU, and a grant of
USD 1 million to SNV for continued funding of OSSUP over a five year period.
Approximately USD 70 million will be financed by OPUL for oil palm development on
Buvuma Island, representing about 48% of total project costs. Mechanisms for the
financing of the operational cost of KOPGT are expected to be in place by December
2015, so that KOPGT will become self-financing and will thus provide approximately USD
1 million over the three years remaining for project implementation. The total cost of
smallholder plantation development (loans to farmers for inputs and their labour, and
three years of maintenance) will be about USD 18 million. IFAD will finance USD 13.7
million and the balance of about USD 4.4 million will be financed by the Trust, starting in
2016, from the repayments made by farmers benefiting from loans for initial oil palm
development on Kalangala and financed by VODP. Loans to smallholder oil palm farmers
actually only cover a portion of their labour, and their additional labour has been costed
at about USD 3.4 million, while farmer contribution to bulking storage facilities for
oilseeds is estimated at about USD 500 000. SNV is currently hosting the OSSUP
platform and is expected to provide USD 340 000 in technical assistance over the next
three years with additional funding thereafter, while the IFAD grant of USD 1 million will
support a range of field activities and stakeholder consultation processes until 2016.
103. The current estimate of the Government contribution to the project stands at
about USD 14 million, representing 9.6% of total cost, mainly to cover the cost of land
purchase on Buvuma Island (about USD 8.3 million). About USD 5 million has been
estimated to cover the cost of the two ferry barges, but this might be financed by InfraCo
under an arrangement similar to the one for Kalangala, which would reduce the level of
financing required from the Government. The Government will also finance the employer
contribution to National Social Security Fund (NSSF) for all staff employed by the project,
while employees will finance their own share from their salaries. The financing plan by
expenditure account is provided below in Table 4:
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Main Report
Table 4. Expenditure Account by Financiers (USD millions)

IFAD
Amt
I. Investment Costs
A. Vehicles, Equipments and Materials
B. Land Purchase
C. Civil Works
D. Consultancy Services and Studies
E. Training
F. Oil Palm Development
G. Oilseeds Guarantee
Total Investment Costs
II. Recurrent Costs
A. Salaries and Allowances
B. Vehicle Operating Costs
C. Other Operating Costs
Total Recurrent Costs
Total PROJECT COSTS
IFAD grant
Amt
%
Govt
Amt
OPUL
Amt
Trust
Amt
KOPGT
Amt
Farmers
Amt
SNV
Amt
Total
Amt
8.78
3.32
11.21
7.56
13.81
1.55
46.24
14.8
11.3
87.9
100.0
65.5
100.0
33.0
0.03
0.97
1.00
0.1
7.6
0.7
4.81
8.1
8.35 100.0
0.58
2.0
0.23
1.8
0.00
13.97 10.0
45.92
24.45
70.38
77.1
83.2
50.2
4.44
4.44
21.1
3.2
1.05
2.85
3.90
3.6
13.5
2.8
0.34
0.34
- 59.55
8.35
- 29.40
2.6 12.75
7.56
- 21.10
1.55
0.2 140.26
2.38
1.98
1.40
5.76
52.00
66.4
100.0
100.0
82.7
35.3
1.00
0.7
0.17
0.00
0.00
0.17
14.14
70.38
47.8
4.44
3.0
1.04
1.04
1.04
28.9
14.9
0.7
3.90
2.6
0.34
3.59
2.4
1.98
1.3
1.40
0.9
6.97
4.7
0.2 147.23 100.0
4.7
2.4
9.6
40.4
5.7
20.0
8.7
5.1
14.3
1.1
95.3
104. Project Accounts and Audit. The PMU will be responsible for maintaining an
accounting of the funding of the project from all sources, and the management of all
expenditures financed from the IFAD loan. All expenditures will be recorded in the
project computerised accounting system, which will include a linkage to KOPGT for the
duration of the period in which it continues to receive IFAD loan funds. Separate accounts
will be maintained for IFAD-financed expenditures, in line with international standards.
The Auditor General Office will be responsible for providing annual audit of project
accounts, within 120 days of the end of the financial year. However, in case an audit
cannot be submitted within six months of the end of a financial year, the Auditor General
will appoint independent auditors acceptable to IFAD to complete the audit within nine
months of the end of the financial year.
105. Procurement. For VODP2, total IFAD financing is USD 52 million, with USD 25.49
million to be funded by direct purchase, of which USD 13.7 million will be spent on Oil
Palm Development and USD 5.59 million on salaries. Under the tripartite agreement
between GoU, OPUL and KOPGT, KOPGT is supplied farm inputs (seedlings, fertilisers and
other agricultural chemicals and tools) by OPUL at cost as demonstrated by its invoices
and validated by the Service Cost Panel (the operational details on these arrangements
are provided in Working Paper 4). In addition to inputs provided in-kind, KOPGT makes
a cash payment to individual farmers once their land preparation and planting conforms
to the agreed upon technical criteria. The same system will be followed under VODP2,
and IFAD disbursements for these payments will be processed in the same way that they
have been processed under VODP. About USD 11.65 million will be contracted through
national competitive bidding, mainly for the provision of extension for oilseeds farmers.
Table 5: Procurement Methods to be used for IFAD Funding (USD)
International Competitive Bidding
4.67
National Competitive Bidding
11.65
Quality and Cost-Based Selection
2.63
Local Shopping
3.86
Direct Purchase
25.49
Force Account
0.74
Financial Intermediaries
1.55
Other
1.40
Total
52.00
106. Procurement procedures. IFAD has reviewed the application of procurement

regulations by MAAIF during the course of direct supervision of VODP and during
participation in the financial management missions of the World Bank for the preformulation and formulation of a planned sector support operation. MAAIF regulations
are in line with international standards. There have however been long delays in
processing procurement for VODP, and such delays would be particularly risky given the
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Main Report
volume of annual national competitive bidding required for the contracting of private
operators for the provision of season-dependent extension for oilseeds farmers. Two
IFAD programmes operating in Uganda (RFSP and NAADS) have been mandated by their
lead ministries to have their own procurement committees. In order to enable VODP2 to
be efficient and interact successfully with private operators and millers, MAAIF will
delegate to VODP2 PMU to undertake its own procurement review and selection, which
will be submitted to IFAD for approval prior to contract signature.
107. Procurement of major goods and works and hiring of consultants will comply with
the current IFAD Procurement Guidelines. The procurement of goods of a value of at
least USD 100 000 will be under International Competitive Bidding (ICB) procedures.
Items costing more than USD 20 000 but less than USD 100 000 will be procured under
National Competitive Bidding (NCB) procedures also open to international suppliers. The
latter procedure will also apply to contracts for civil works. Items costing less than USD
20 000 and which have been provided for in the AWPB will be procured under local
shopping procedures acceptable to IFAD, that is, evaluating and comparing bids invited
from at least three suppliers.
108. Government standard bidding documents and contracts for goods, works,
technical assistance and consultant services will be used for procurement where
applicable. All bidding documents for procurement packages estimated to cost in excess
of USD 100 000 for goods and USD 50 000 for consultant services will be subject to prior
review by IFAD. Other contracts will be subject to random review by IFAD supervision
missions.
109. Designated Accounts. The current practice under VODP is that withdrawal
applications for farm inputs provided by OPUL are submitted by the PMU and IFAD makes
a direct payment to OPUL. For cash payments to farmers, KOPGT receives a threemonth cash advance from the PMU (provided from the Special Account) and once KOPGT
has proof of the payments made to farmers, the justifying documentation is submitted to
the PMU, which submits a replenishment request to IFAD.
110. Under VOPD2, cash payments to farmers are expected to total about USD 10
million, and to ensure timely disbursement, there will be two designated accounts, one
exclusively for pre-financing the cash payments to farmers for oil palm development
(initially operated by the PMU and then operated directly by KOPGT following prior
approval by IFAD) and one for all other expenditures (operated by the PMU). For the oil
palm development designated account, the initial deposit should be USD 1 million with a
ceiling of USD 3 million, so that it can be raised during the course of supervision as
warranted. The initial deposit into the PMU account will be USD 1 million with a ceiling of
USD 2 million, as expenditures warrant.
111. Disbursement. The PMU should make maximum use of direct payments for
contracts about USD 20 000 in order to avoid large draw downs on the designated
account and to ensure that pay-for-service providers receive their funds in a timely
manner. Disbursements against advances to the designated accounts will be made for all
eligible expenditures excluding taxes and duties against submission of supporting
documentation.
112. Transparency and anti-corruption. While there have been no issues relative to
transparency issues under VODP, there is still substantial room for improvement in the
financial management systems which have experienced extended delays in procuring
required goods and services, and processing payments. In order to build confidence with
the project private sector operators and farmers, VODP2 will make a strong commitment
right from the start of active management and time bound completion of procurement
and payment processes. The introduction of a computerised accounting system will
substantially reduce the scope for human error and will introduce a means of making
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Main Report
financial information immediately available. The project operations and financial manual
will articulate what kind of internal controls and administrative systems will be put in
place to guarantee transparency and accountability.
113. With its focus on working with the private sector, VODP2 will work with these
partners on the basis of annual performance contracts. VODP2 will also work with five
other government services (NaSARRI, NaCRRI, COREC, NSCS and UNBS) and
collaboration with these services will also be on the basis of annual performance
contracts.
If performance is not satisfactory, the contracts will not be renewed.
Confidence building among farmers to explain how VODP2 will be contracting service
providers and millers for extension will also be undertaken. As farmers become better
versed in farming as a business, they will be able to bring these skills to understanding
the business linkages that the project will be fostering with millers.
VIII. PROJECT RISKS AND SUSTAINABILITY

A. Risk Analysis
114. Project Risks: The innovative nature of the Project implies a number of risks that
call for the incorporation of mitigation strategies in the Project design. This section first
considers the risks at the overall project level, their possible consequences, and proposed
mitigation measures as discussed in Table 6, followed by a discussion of the specific risks
for each activity
Table 6: Risk Analysis
Risks
Failure of the private sector to
fully engage in the Project.
Possible Consequences
Oil palm component could not be
implemented as planned.
Oilseed growers will remain
isolated from markets and without
access to necessary inputs.
Limited implementation capacity

in relevant ministries and
departments
Scarcity and lack of capacity
among service providers.
Financing constraints limit
smallholder and SME
participation.
Hybrid seed sunflower and
improved varieties for soybean
are not available for farmers to
buy
Impact of HIV/AIDS on Project
implementation and of Project on
increasing risk of HIV infection.
Poor infrastructure in oilseeds

area constrains development of
business linkages
Delayed and/or ineffective

implementation.
Expensive and/or poor quality
services delivered to
beneficiaries.
Farmers and SMEs are unable to
obtain the funding needed for
value chain development.
Farmers unable to plant improved
varieties
Smallholders attention diverted

from productive activities to
coping strategies.
Some investments in capacity
building wasted.
Increased risk of infection as a
result of greater mobility and
increasing incomes.
Farmers are not able to establish
credible linkages with processors
and other operators
Mitigation Measures
Ensure that terms of the PPP are attractive for the
private partner(s).
Increase interaction with private sector.
Avoid activities (e.g. seed handouts) which crowd out
the private sector.
Provide targeted support and capacity building for
sub-sector platform.
PMU will play a management role
Make maximum use of private service providers and
NGOs
Training and capacity building for service providers in
relevant fields. Outsourcing for SMS , HIV/AIDS,
gender, etc.
Provide assistance in linking oilseed growers and
SME-scale agribusiness ventures to existing sources
of finance through guarantee scheme.
Encourage industry to make provision for continued
import of hybrid seed for sunflower. Seed companies
have more active role in bulking up soybean.
HIV/AIDS considerations will be integrated into all
VODP2 implementation activities.
Work with local governments to ensure that rural

access road development is focused in hub areas.
Avoid sub-counties that will remain isolated.
115. Oil Palm Component: Given the lessons learned on Bugala Island, and the
successful model which has emerged, the risks of oil palm development are generally
low. However, the following risks need to be considered.
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Main Report
There is a possibility that Government will not be able to procure sufficient land at
a reasonable price on Buvuma Island for the proposed 6 500 ha nucleus estate,
leading to lack of investor interest in the Buvuma scheme. IFAD and GoU may
consider how to develop it as a smallholder only scheme, with OPUL as a service
provider.
KOPGT has some way to go before it is a financially and operationally sustainable

farmer service organisation. BOPGT may encounter the same problems as KOPGT.
To minimise this risk, KOPGT will build its financial and managerial capacity in a
sustainable manner, and will provide technical support to BOPGT.
Targeting presents a challenge and a risk for oil palm component, arising from the
skewed distribution of land holdings and the lack of formal land titles for many
small farmers. This risk will be addressed by special measures to help landholders
obtain land titles, providing a credit scheme to finance plantation establishment
costs, limiting the support package to five hectares per household, and livelihood
enhancement activities for both growers and non-growers in oil palm
communities.
So far, oil palm development on Bugala Island has faced few agronomic
challenges. An extended dry spell and pests are two of the types of risks that
may be faced. While there is limited scope to change rainfall, it is expected that
OPUL will immediately address pest and disease risks and these measures will be
extended to smallholders. With regard to fertilizer applications, the nutrient
content required is carefully monitored by OPUL and then bulk ordered for both
the nucleus estate and smallholders.
There may be greater demand for oil palm development financing by smallholders
than budgeted for under VODP2. In this case, IFAD may need to consider
supplementary funding.
If no land is found for additional replication of the nucleus estate-smallholder

10 000 ha model, then there will be a need to develop and pilot a stand-alone
smallholder model. In this case, GoU may wish to request another phase of IFAD
support.
116. Oilseeds Component: While there have been notable developments for the
oilseeds industry and soybean represents a significant new and lucrative opportunity,
there are also a number of risks:
Oilseeds development efforts could be spread too thinly and sparsely, as the subsector involves a large number of commercial and institutional stakeholders in a
fragmented industry, covering 100 000 km2 with a population of almost 12 million,
with about 136 000 potential oilseeds farmers. To promote synergies and achieve
visible impact, project supported activities will be focused on the hub areas to
build sufficient critical mass to forge strong commercial linkages between farmers
and input suppliers and millers.
There could be a reoccurrence of civil insecurity in the hub areas, which could
affect the willingness of the private sector to invest in milling facilities and input
supply, and make them reluctant to provide contracted extension. The Lira hub
has developed over the past ten years, notwithstanding civil insecurity. VODP2
will have flexibility and in more remote areas where service providers may not
wish to operate, consideration will be given to extension provision through
districts only in those areas of the hubs.
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Main Report
The availability of quality hybrid/improved seed in sufficient amounts and at the

right time is critical for enabling farming to raise their production of crushing
material. There is a risk that the institutes responsible for plant breeding,
NaSARRI and NaCRRI, will fail to make available sufficient supplies of hybrid
parent lines to the seed companies. VODP2 will provide support to NaSARRI and
NaCRRI, on condition that they deliver defined results and engage with the seed
companies.
The Project will also develop the capacity of the MAAIF seed
certification and inspection service to ensure quality control in the seed business.
If these efforts are not sufficient, VODP2 will work with the industry to ensure that
quality seed is imported.
Continuing declines in soil fertility is a risk for oilseeds cropping. Ugandan

farmers are generally reluctant to use fertilisers, preferring to abandon plots and
open new land when yields deteriorate. This may be sustainable in a low intensity
subsistence farming system, but in the more intensive semi-commercial and
commercial farming systems, fertility and yield declines are inevitable. Generally
farmers have a poor understanding of the importance of fertiliser use, and do not
know practices for sustainable land management. MAAIF has brought this issue
to the top of the development agenda for agriculture in Uganda under the DSIP,
and VODP2 will address the sustainability issue by supporting research and
demonstrations of conservation farming systems for the major oilseed crops,
involving integrated fertility management, crop rotations, and minimum tillage
systems to conserve organic matter.
B. Exit Strategy and Post Project Sustainability
117. Commercial incentives and private sector participation are the keys to
sustainability and the central pillar of the Projects exit strategy. The model for nucleus
estate/smallholder oil palm schemes around the world have a good record of
sustainability because it is very much in the interests of the operating company to ensure
that smallholder production is sustained in order to achieve full utilisation of milling and
refining capacity. Once these schemes are up and running, Governments role is limited
to maintenance of public infrastructure and social services to grower communities.
118. In the oilseeds component, the project will put together partnerships with the
private sector on a cost-sharing basis so they can experience working directly with
smallholders, but more important, farmers can learn what they need to do to have
durable, commercial relations with intermediaries and millers. By establishing these
business relationships, there will be no need for further public support.
C. Innovative Features
119. Public-Private Partnership: VODP is the only large PPP in IFADs portfolio.
VODP has demonstrated that it is possible to leverage very large private sector
investments through the strategic use of relatively small amounts of IFAD concessional
finance, and that when this occurs, Government is also prepared to make major
investments in land acquisition and infrastructure development. The result is a financing
package in which IFAD funds make up only about 35% of total costs for VODP2, and less
that 30% of the total investment costs since 1998.
120. Focusing Oilseed Development: Experience from VODP has demonstrated the
benefits of concentrating effort in a relatively small area to stimulate the development of
commercial linkages and supply of services. The Lira agro-industrial hub where the five
surrounding districts supply some 80% of the sunflower crushing seed in the country,
and where farmers are well serviced by the milling companies for the supply of planting
seed, technical services and purchase of the product, demonstrate this. Although VODP2
will operate in 37 districts, it will concentrate its resources in sub-counties in close
38

Main Report
proximity to the new agro-industrial hubs in the expectation that these will develop in a
similar way to Lira, providing the means of integrating oilseed growers into the
commercial environment.
121. Environmental and Social Issues: VODP2 will continue to have a pro-active
approach to managing environmental and social impacts through the conduct of
environmental and social impact assessments as part of the ongoing design process.
These will concentrate on the oil palm component where the risks are perceived by the
public to be greatest, but should also be expanded to include the oilseed component.
122. Climate change: A very preliminary effort has been made to look at some of the
issues associated with climate change relative to oil palm development, as well as the
emissions associated with the importation of vegetable oil over long distances of sea and
land routes. Promoting Conservation agriculture for the oilseeds component is also be
pro-climate.
D. Project Knowledge Products and Learning Processes
123. The learning processes that VODP2 will establish and the expected knowledge
products that will be generated are presented in a preliminary manner in Working
Paper 7. The rapid spread of ICT in Uganda is opening up opportunities for knowledge
dissemination and exchange through affordable mobile telephony and internet services.
The Project will support the establishment of a web-based learning on oilseed crops and
SMS-based market information dissemination. The objectives of this activity will be to
document and share success stories and lessons learned in the development of vegetable
oil value chains and to disseminate market and other information to interested
stakeholders.
E. Regional Knowledge Networking
124. Through its investments in web-based information and knowledge management,
VODP2 will facilitate a multi-directional flow of information about vegetable oil
development as an instrument of agricultural commercialisation and rural poverty
reduction. This will be relevant to IFAD and other donor-supported programmes in the
region, which are facing similar challenges as a result of regional integration, stronger
economic growth and rising consumer demand for food products. The knowledge
management activities will interact with regional knowledge networks such as those
promoted by IFAD, through the regional thematic programme on Strengthening Support
Capacity for Enhanced Market Access and Knowledge Management (SCAPEMA), and
through the FIDAFRIQE/IFAD Africa networking regional programme. Particular attention
will be given to establishing an effective network with other IFAD-supported programmes
dealing with rural commercialisation, value chain development and market linkages - in
countries which are part of the East Africa Community and COMESA so that trade in
oilseeds, refined oils and fats products and oilseed meals of Uganda origin are zero rated
under the common customs codes.
***
39
REPUBLIC OF UGANDA
VEGETABLE OIL DEVELOPMENT PROJECT- PHASE 2 (VODP2)
MAIN REPORT
APPENDICES
REPUBLIC OF UGANDA
MAIN REPORT
APPENDIX 1
LIST OF PERSONS MET
Uganda: Vegetable Oil Development Project 2 (VODP2)

Project Design Document: Main Report
Appendix 1: List of Persons Met
LIST OF PERSONS MET
NAME/ORGANISATION
TITLE
Ministry of Finance, Planning and Economic Development

Mr. Keith Muhakanizi
Deputy Secretary to the Treasury
Ministry of Agriculture, Animal Industry and Fisheries
Hon. Hope Mwesigye
Minister
Vincent R. Rubarema
Permanent Secretary
Komayombi Bulegeya
Commissioner, Crop Protection
Okasai S. Opolot
Acting Director, Crop Resources
Albert Mugenyi
GIS Specialist
VODP Project Staff
Connie M. Masaba
Robert Khaukha
Zakayo Muyaka
Peter Abong
Anthony Ogwang
Patrick Opolot
Rosyline Asiimwe
George Nsubuga
Margaret Kasasa
Project Coordinator
M&E Officer
Technical Officer
Technical Officer
Project Accountant
Procurement Assistant
Accounts Assistant
Accounts Assistant
Project Administrator
PRIVATE SECTOR
Oilseed Millers
Fred Wanyana
Charles Khaukha
Martin Wanjala
Peter Musamali
David Luseesa
Reji V Narayanan
Robert Adwek
Simon Santhus
R.K.Bhargava
Chalichama Pitchaiah (Chowdry)
Dr.G.R. Anap
Surjit Singh
Joshua Abong
Deo Kibirige
Ongom Henry
Wanyano Oil Mills

Khaukha Oil Mills
Mukunkus and Sams Oil Mills
Weme Enterprises
Extension Specialist, Mukwano Oil Mill
Oils and Fats, Mukwano Oil Mill
Operations, Mukwano Oil Mill
Finance, Mukwano Oil Mill
Mount Meru Oil Mill
Mount Meru Oil Mill
Shri Krishnaji Agro-processing Industries
Managing Director, Guru Nanak Oil Mills
Accountant, Twin Brothers Limited
NUOMA
UNADA / Lira offices
Seed Companies
Patrick Soitta
Eva Luwerekera
Eva Juliet Kabejja
SUKURA AGRO supply Ltd

Victoria Seeds Ltd
Victoria Seeds Ltd
Financial Institutions
Fabian Kasi (FCCA)
Robwert Bwire
Abdul Kyanika Nsibambi
Ben Eyabu
FINCA Uganda Ltd

FINCA Bank
Centenary Bank
Centenary Bank
OPUL
Kodey R. Rao
Chin Pit Te
Vincent Owor Adipa
Rajiv Rillia
Silalahi Pangihutan
Managing Director
Plantation Manager - Wilmar
Admin. Manager OPUL/Wilmar
Head of Finance and Accountants
Mill Construction Building Manager

Uganda Oilseed Producers Association (USOPA)

Tom Anang-Odin
Member
Uganda Bureau of Standards

Stella Apolot
Acting Head
Uganda Honey Bee-keepers Association

Ramsey Owot
Maria Owot
DONORS
INFRACO
John Opiro
Joanna Moresky
Douglas (Pug) Bennet
Managing Director
Management Services
Director
USAID
Gaudensia Kenyangi
Brian Conklin
Agricultural Development Specialist

Deputy Director (Office of EG)
APEP (Agricultural Productivity Enhancement Project)

Mark Wood
Commodity Commercialisation (2008)
ASPS DANIDA
J. A Byekwaso
Programme Officer
AGRA
Fred Muhhuku
Programme Officer
ROYAL DANISH EMBASSY

John F. Olwery
SNV
Duncan Mwesige
Senior Advisor
BUGALA ISLAND, KALANGALA DISTRICT

Ministry of Water and Environment
Hon. Jesca Eriyo
Minister of State
Member of Parliament
Hon. Nvumetta Ruth Kavuma
Kalangala District
Ministry of Water and Transport

Paul Ssesanga
Senior Water Engineer
National Forestry Authority

Damian Batureine Akankwasa
Executive Director
National Environment Management Authority

Dr. Henry Aryamanya-Mugisha
Executive Director
Stanbic Bank (Kalangala)

Richard Betungura
Bank Manager, Bugala Island
CORI (Oil Palm Research)

Dr P. Watala
Researcher
Kalangala District
Daniel Kikoola
Fred Kizito Mukasa
Chairperson, LC V
Deputy Chief Administrative Officer

M. David Balironda
Edward Bugimbi
N.M. Baliremwa
Ronald Mwkusa
Isaac Mugera
District
District
District
Deputy
District
Agricultural Officer
Health Inspector
Engineer
Internal Security Officer
Information Officer
KOPGT Staff
Nelson Basaalidde
Allen Najjemba
Stephen Esamu
Emmanuel Nyankori
Fred Masolo
Naster Achomu
Josephine Ariao
Enid Twongyeirwe
Anthony Omal
Charles Kateregga
Emmanuel Twinamatsiko
Frank Turyahikayo
Stephen Ddungu
Manager
Administrator
Accountant
Trainee Accountant
Credit Officer
Logistic Officer
M&E Officer
Field Officer Kagulube
Field Officer Kalangala
Field Officer Kayunga A
Field Officer Kayunga B
Field Officer Bbeta East
Field Officer Bbeta West
KOPGA
Martin Lugambwa
Constantino Nsubuga
Fortunatus Lule Bujjumbe
Joephine Nsmulindwa
Maria Kayunga Naluwooza
Jason Bruno Kabwawa
Samuel Sonko Bujumba
Jackson Kisolo Kayunga
Francis Jane Naggamda
Paul Lwasa
Chairperson
Vice Chair
Secretary for Finance
Secretary
Publicity Officer
Executive committee
Member
Member
Member
Member
Farmers and Committee Members

Beta West Block
Kayunga Block
Kalanga Block
Kalangala Block, Bunyama Island
50 farmers
Farmer group
2 farmers, roads inspection
10 farmers
MUKONO DISTRICT
Francis M Lukooya
Livingstone Zzina
Simon Kiyuba
Fred Mukulu
Anne Nakimbugwe
James Kunobwa
Kibuwe Manu Musvu
Sarah Namisi
Stephen Mabira Mukasa
Laurence Sserwanga
Asuman Muwumuza
Andrew Kibera
Chairperson LCV
Vice chair, LCV
Assistant Chief Administrative Officer
District Production Officer
District Environment Officer
A/M
District Agricultural Officer (absent)
Assistant District Agricultural Officer
Secretary for Production
Secretary Finance
Land Acquisition consultant VODP

BUVUMA ISLAND
Busamuzi Sub-county
Adrian Wasser
Ahamed Kyendo
Deo Muyimbwa
Fred Kiwanuka
Cornie Wasswa
M Katamba
Stephen Mabiru
Susan Nyuki
Thomas Ssebugula
Chairperson LC III
Sub-county chief
Area Land Committee, Chairperson
Secretary for Production
Speaker
Agricultural Officer, Nairambi
Agricultural Officer, Busamuzi
Community Development Officer
Landlord
SIRONKO DISTRICT
Peter Henry Wotunya
Matilda Makabayi
Sam Wamburu
Robert Kizubo
Hussein Masaba
DCO
District Agricultural Officer
Secretary
Vice Chairperson
Sec Technical Services
Bwikhonge Sub-county
John Matingo
Andrew Miniongo
Fred Wataja
Banambutye Integrated Farmers Group
Charles Magomu
Bunambutye Irrigation Group
Community-based parish facilitator,

Chairperson, LC I Bumasari
Secretary, Bumulale Village farmer group
Leaders and members (20 in total)
AO/IC
BUKALU SUB-COUNTY
Alex Burundo
Hajji Mauso Muhamad
Sisimukha Traders Group
Chairperson LC III
Chairperson LC I
NASARRI/NARO
Walter O. Anyanga
David Kalule Okello
Pascal Nalyongo Watiti
Geofrey Lubadde
George Epieru
Moses Bivuma
James Oumo
John Emanio
Research Officer
Senior Technician
DOKOLO DISTRICT
Geoffrey Sam Okaka
JB Okello Okello
Lagero Oruma Opio
Oribcing Women Group
Iguli United Women Group
Local Government
Local Government
Local Government
LIRA DISTRICT
Patrick Ayena
Hellen Alip
Cecilia Agang
Peter Ajungo
Emmanuel Ageta
Frederick Doi
Secretary for Health and Education

Committee PMNR
Secretary for Finance
UNBS Lira Regional Officer
UOPSA Regional Manager

APAC DISTRICT
Alex Jurua
Ben L. Marley
Yovan Ogwang
Jacob Ngura
Francis Ayoo
Yot Kom en Lonyo (farmers group)
Rem Kan Ikweri Group
Jacob Ngura
Bonny Okello
Alfred Ojuka
Joel Oduor Opyene
Robin Okello
Alito Joint Christian Farmers Group
Resident District Commissioner

Assistant Chief Administrative Officer
SMS/Monitoring and Evaluation Officer
AAO
For DAO
For DAO
For DAO
Agric Dept. Abongomola
Apac Field Extension Worker, UOSPA
REPUBLIC OF UGANDA
MAIN REPORT
APPENDIX 2
PROJECT LIFE FILE

Appendix 2: Project Life File
REPUBLIC OF UGANDA
APPENDIX 2
PROJECT LIFE FILE
COSOP IFAD Report n 1607, September 2004

VODP 1997 through June 2012 see bibliography attached to this project life file
Interim Evaluation, draft including Government comments, 26 December 2009
Key Legal Agreements for Oil Palm relevant to VODP2
Memorandum of Understanding between the Government of Uganda and Bidco Oil
Refineries for the development of Oil Palm Industry in Uganda, 10th February
2000
Agreement between Government of Uganda and Bidco Oil Refineries Ltd for the
development of oil palm in Uganda, 4th April 2003
KOPGT Certificate of Registration, 24th June 2005
Tripartite Agreement between Government of Uganda, Oil Palm Uganda Limited
and the Registered Trustees of Kalangala Oil Palm Growers Trust for governing
the relations among the entities, 28th April 2006
First Design
January 2006, Weaving the oilseed web: Report of a scoping mission January 20th
January 31st 2006, SNV
August 2007, GoU Request to IFAD for follow-on support for vegetable oil subsector
October 2007, Study on the Development of the Value Chain for the Sunflower
Industry in Uganda, Greenwich International (UG) Ltd
December 2007, Formative Evaluation of the Agricultural Productivity
Enhancement Program (APEP), Final Report, USAID
January 2008, GoU Official Request and GoU Concept Paper
April 2008, IFAD Consultant Report: Uganda Oil Palm Development Phase-II, Billy
Ghansah
May 2008, Consultant Report: Value Chain Development and Extension Modalities
in Traditional Oilseed Sub-Sector, Clare Bishop
March 2008, PDT meeting 1st draft IFAD Vegetable Oil Sub-Sector support
Programme (VOSSP) Concept Note, no minutes
24th June 2008, IFAD VOSSP Concept Note and OSC minutes

28th July 18th September 2008, TOR Formulation VOSSP

14th August 2008, VOSSP Aide-Memoire
November 2008, Market Research Studies Sunflower Market Research Study in
Central Uganda, Draft, Consultant Report, William Kyamuhangire, PhD
1-12 December 2008, 1st IFAD Direct Supervision Mission, Aide Memoir
January 2009, Vegetable Oil Sub-sector Support Programme, Institutional
Support Review, Consultant Report, James Ssemwanga
January 2009, Draft Conceptual Framework on Carbon Footprint and Climate
Change for Oil Palm, IFAD Consultant Tito Santos
31 August 2009, 1st draft Design Report and Working Papers
14th September 2nd October 2009, Post-Formulation Mission, Aide Memoire
November 2009, Vegetable Oil Development Project, Interim Evaluation, Draft
Quality Enhancement
14
31
31
24
19
Sept 2009 PDT minutes

Oct 2009 Vegetable Oil Development Project, Phase 2, Project Design Document
Oct 2009 Maturity Assessment Template (MAT)
Nov 2009 Reviewers Recommendation Note
Dec 2009 QE Panel Report
Final Design
December 2009 Design Mission Aide Memoire
Quality Assurance
8 Jan 2009 Compliance Note
(date) Questions from Review(s)
(date) QA Recommendations for VP Consideration
(date) QA Final Note

Bibliography VODP
General Background documents:

Nature, Distribution and Evolution of Poverty and Inequality in Uganda, 1999- 2002
Uganda Bureau Of Statistics, International Livestock Research Institute, World Bank
Uganda Country Strategic Opportunities Paper, September 2004, IFAD
Uganda Human Development Report 2007, UNDP
IFAD Strategic Framework 2007-2010, IFAD
Design Documents:
Specific Identification Report, June 1994, IFAD
Socio-economic and farming systems review Report - Smallholder vegetable oils
development support project, February 1995, FAO/IFAD cooperative programme
Infrastructural Improvement-Working Paper-Formulation, June 1995, IFAD
Formulation Report, June 1995, FAO/IFAD cooperative programme
Pre-Appraisal Report, August 1995, IFAD
Report and Recommendations of the President to the EB on a proposed loan to
Uganda for the VODP, April 1997, IFAD
Appraisal Report N. 0735-Ug Vol I: Main Report and Annexes and Vol II: Working
Papers, April 1997, IFAD
Internal IFAD correspondence about design:

TRC N.34/95/PF Pre-Appraisal Report: Uganda VODP, August 1995, IFAD
PPRC N. 95/42/PF UGANDA Draft Appraisal Report: Uganda VODP, September
1995, IFAD
Technical comments from PPRC/PF: Uganda VODP, September 1995, IFAD
Technical comments from PT on Environmental Assessment, 5th February 1997,
IFAD
OSC brief: Uganda - VODP Appraisal, February 1997, IFAD
Prepared by F. Iachetti, 17 December, 2008

Legal Agreements:
(a)
IFAD Legal Agreements and Amendments:

Loan Agreement (VODP) between the Republic of Uganda and IFAD, 26th May 1998
Appointment of WB as Cooperating Institution, June 1998, IFAD letter and fax
Appointment of UNOPS as Cooperating Institution, 30th August 2004, IFAD letter
Raising allocation Special Account from $500 000 to $1million, 14th February 2005,
IFAD fax
Amendment to the Project Loan Agreement, 6 June 2005, IFAD letter
Disbursement Effectiveness of loan category VII (Oil Palm Development Support), 8
June 2006, IFAD fax
Re-allocation and Extension/Harmonization of Project Completion and Closing
Dates, 9 May 2008, IFAD letter, Memo and fax
(b)
Oil Palm Legal documents

Memorandum of Understanding between the Government of Uganda and Bidco Oil
Refineries for the development of Oil Palm Industry in Uganda, 10th February 2000,
GoU/Bidco
Agreement between Government of Uganda and Bidco for the development of oil
palm industry in Uganda, April 2003, GoU/Bidco
Tripartite Agreement between Government of Uganda, Oil Palm Uganda Limited and
the Registered Trustees of Kalangala Oil Palm Growers Trust for governing the
relations among the entities, 28th April 2006
KOPGT Certificate of Registration, 24th June 2005
(c)
Other Legal documents

The Uganda Land Act, July 1998, Uganda Gazette, GoU
Approval of the Environmental Impact Statement for the proposed VODP in Bugala
Island Kalangala, February 2001, NEMA -MAAIF
NEMA certificate of approval of EIA, January 2004, NEMA
VODP Project Reports:

Project Implementation Manual, May 1998, MAAIF
Annual
Annual
Annual
Annual
Annual
Annual
Work
Work
Work
Work
Work
Work
Plan
Plan
Plan
Plan
Plan
Plan
and
and
and
and
and
and
Budget
Budget
Budget
Budget
Budget
Budget
July
July
July
July
July
July
1998/June
2004/June
2005/June
2006/June
2007/June
2008/June
Annual Report 1998/1999, VODP/MAAIF
1999,
2005,
2006,
2007,
2008,
2009,
May 1998 VODP/MAAIF

Dec 2003 VODP/MAAIF
June 2005 VODP/MAAIF
May 2006 VODP/MAAIF
June 2007 VODP/MAAIF
April 2008 VODP/MAAIF

Annual
Annual
Annual
Annual
Annual
Annual
Annual
Report
Report
Report
Report
Report
Report
Report
Progress
Progress
Progress
Progress
Progress
Progress
Progress
Progress
Progress
Progress
Progress
Audit
Audit
Audit
Audit
Audit
Audit
Audit
Audit
Audit
1999/2000,
2000/2001,
2001/2002,
2002/2003,
2003/2004,
2004/2005,
2006/2007,
Report
Report
Report
Report
Report
Report
Report
Report
Report
Report
Report
Report
Report
Report
Report
Report
Report
Report
Report
Report
at
at
at
at
at
at
at
at
at
VODP/MAAIF
VODP/MAAIF
VODP/MAAIF
VODP/MAAIF
VODP/MAAIF
VODP/MAAIF
VODP/MAAIF
July-December 1998, VODP/MAAIF

October 2001, VODP/MAAIF
February 2002, VODP/MAAIF
July-December 2002, VODP/MAAIF
June 2005, VODP/MAAIF
December 2005, VODP/MAAIF
the
the
the
the
the
the
the
the
the
30th June 1999, July 2000, J. Kahoza-VODP

30th June 2000, August 2001, J. Muwanga-VODP
30th June 2001, February 2002, J. Muwanga-VODP
30th June 2004, January 2004, J. Muwanga-VODP
30t June 2005, January 2005, J. Muwanga-VODP
Other VODP Reports (under preparation)

Baseline Survey of VODP Report 1998 (VODF Component)
Report on Traditional Oil crops- July-Nov 1998
Baseline Survey Report on Production, Processing & Utilization of Essential Oils in
Uganda 1999
Mid-term review report 2000 At-Uganda
Report on Traditional Oilseeds Development Component on Vegetable Oil
Development Project May 2000-May 2001
Progress Report 2000-2002 UOSPA
Progress Report 2001/2002, NARO-CORI
Mid Year Progress Report 2002/03 UOSPA
M & E Survey, 2003
Essential Oils Sector Mid-term Activity Report, March 2003
Mid-term Review Report, September 2003, Jim Semple, VODP/MAAIF

Annual Report - Oil Palm Research Report July 2003-June 2004 NARO-CORI
Technical Review Report on the Oil Palm Component, Oil Palm Development &
Processing, July 2004, VODP
Mid-term Review Report, October 2004, VODP/MAAIF
Report on Research & Essential Oils July-Dec. 2004
Annual Report July 2004 June 2005, CORI
Ram Press Capacity Utilization Study, December 2004, MAAIF
Evaluation of Soyabean genotypes, Production of soybean processing & Utilization
at Rural household level, December 2004, Crop Sc. Dep/MAK; FOSRI-NARI;
National Soybean Network; District Local Councils; NGOs/CBOs
Mid-term Progress Report: Evaluation of Soyabean genotypes, 2005
Report on the summary of proceedings of one week workshop on participatory
planning, monitoring and evaluation, October 2005, MAAIF
Progress Report, Sept-March 2005, SAARI-VODP
Annual Report December 2005, CORI
Mid-term Progress Report: Evaluation of Soyabean genotypes, 2006
Baseline Survey of VODP Report 2006 (Oil Palm Component)
Annual Report July 2006 -Dec 2007, CORI
Summary Report on Essential Oil Project, July-Sept 2007
Impact Assessment Study, March 2007, VODP/MAAIF
Report on progress on oil palm research activities July 2006-may 2007, May
2007, M.P.E. Wetala - MAAIF; NARO
Impact of citronella on food security, MAAIF, 2008
Beneficiary assessment study of the Local Government Programme II, Samuel
Kabuye, January 2008
Supervision Mission Reports:

Supervision Mission Report September 1999, WB
Supervision Mission Report July 2000, WB
Supervision Mission Report June 2001, WB
Supervision Mission Report February 2002, WB
Supervision Mission Report October 2002, WB
Supervision Mission Report October 2003, WB
Familiarization Mission Report December 2004, UNOPS
Supervision Mission Report June 2005, UNOPS
Supervision Mission Report December 2005, UNOPS


Technical Annex for the UNOPS Supervision Report of June 2008, Socfinco S.A.
Technical Annex for the UNOPS Supervision Report of December 2007, Socfinco
S.A.
A component of VODP, May 2008 Socfinco, S.A. (preliminary phase 2 document)
VODP Project Profile, July 2008, IFAD key events over 10 years and summary
of supervision missions plus photocopies of key documents.
Oil Palm Documents:
(a)
Design documents
VODP Oil Palm Development Company Ltd - Project Proposal, July 1996, SIAT sa
- Socit d'Investissement pour l'Agriculture Tropicale
A Report on Alternative Areas for Oil Palm Production in Uganda, April 1998,
M.P.E. Wetala FAO
Notes on Meeting with Bidco directors on the current status of the Oil Palm
Component, February 2002, Notes on Meeting with Bidco directors on the current
status of the Oil Palm Component
Oil palm performance figures projected for Bugala Island compared with those
from Cameroon, 2003, J. Acworth, technical advisor (natural forest management)
Technical Review and Re-Appraisal of the oil palm component- oil palm
development and processing and Appendix, October 2003, IFAD
Bidco Uganda Limited - palm oil agro-industrial project- revised preliminary
presentation document + Appendix supplement, July 2004, Bidco Ltd
An updated review of the viability and practicality of the project component to be
implemented in collaboration with Bidco, May 2002, C. H. Shearing and D. I.
Kimoimo
Oil Palm Component Review Report, (Oil component re-design, prepared),
February 2005, Jim Semple, IFAD
Financing and Institutional Arrangement for small-scale oil palm grower support,
IFAD, May 2005 (Claus Reiner, IFAD consultant)
(b)
Environmental Studies
Environmental Impact Assessment in particular of Oil Palm Development on
Bugala Island, September 1995, Buursink & Associates, Inc.
Environmental Assessment of Oil Palm Development in Bundibugyo District,
December 1996, Entech (Africa) Ltd
Pre-Project Facilitation Main Report; Annex A1: Bugala Island soil/land/demog/oil
palm agronomy/constraction material Survey; Annex A2: Bundibugyo
soil/land/demog/oil palm agronomy/constraction material Survey; Annex B:

Environmental Assessment of Palm Oil Dev in Bundibugyo, January 1997,

Danagro MAAIF, Kampala
Environmental Assessment VODP Mission Report, January 1997, IFAD
Environmental Impact Statement for the proposed oil palm project in forest
reserves of Bugala Island, Kalangala district - VOL 1: executive summary, VOL 2:
main report, VOL 3: appendices, November 2000, MAAIF - Environment
Management Consultants, International Company Ltd (EMCI)
Technical and financial Proposal for Environmental and impact review for the
proposed oil palm development project in Bugala Island, Kalangala District, May
2003, Novo Techni-Consults services Ltd
Environmental Impact Statement for the Propopsed Oil Palm Project, Bugala
Island, Kalangala District (Vol I: Executive summary; Vol II: Main Report; Vol III:
Appendices), October 2003, MAAIF
Analysis of the Kalangala oil palm project, 2004, J.Acworth, technical advisor
(natural forest management)
Environmental Impact Statement for the Proposed Oil Palm Project, Bugala
Island, Kalangala District Addendum, January 2004, MAAIF
Framework for Drafting Criteria for Sustainable Palm Oil RSPO, October 2004,
RSPO-Roundtable on Sustainable Palm Oil
Inspection Report, June 2007, MAAIF/Kalangala District-Environment Officer
Various Stakeholder views of Environmental Issues
Forestry Department comments on the EIA report on oil palm development in
forest reserves of Bugala Island, Kalangala, 2001, GoU - Forestry Department
Response to comments on environment impact statement of proposed oil palm
project in forest reserves on Bugala Island, Kalangala District, January 2001,
MAAIF - Environment Management Consultants, International Company Ltd
(EMCI)
Report on the Presiding Officer on the Public Hearings for the proposed VODP on
Bugala Island, February 2001, NEMA -MAAIF
Comments of EC delegation on proposals to establish 10,000ha of oil palm on
Bugala Island, Kalangala, 2001, EU Delegation
EC Delegation views on the destruction of protected high forest areas for oil palm
estates, March 2001, EU Delegation
Comments on the Environmental Impact Statement for the proposed oil palm
project, Bugala Island, Kalagala District, December 2003, J. Acworth, technical
advisor (natural forest management)
Technical study on options for land acquisition for the oil palm project in Bugala
Island, August 2005
Key questions on the VODP, March 2004, DFID

Technical comments from WB on the EIS, Oil palm component, April 2004, WB
Memorandum presented by the people of Kalangala district at the meeting
between Ssese community, GoU officials and a delegation from EU, February
2004, Kalangala District
Brief on Environment and Natural Resources group meeting (Feb 23, 2007 at
Norwegian Embassy), February 2007, VODP/MAAIF
Technical note on the Bidco oil palm project- Which way forward? - February
2007
NEMA's comments to WB reaction to draft EIA, January 2004, Fax
Conceptual Framework on Carbon Footprint and Climate Change for Oil Palm
Development in Uganda, draft report for IFAD, Tito Santos, January 2009
Environmental Reporting by VODP
Minutes of first Impact Management System Committee (IMSC) meeting, May
2006
Impact Management System Report, Familiarization Visit of the IMC to Kalangala,
June 2006
Minutes of the Impact Management System Committee meeting, December 2006
Minutes of the Impact Management System Committee meeting, November 2007
Minutes of the Impact Management System Committee meeting, January 200910-28
Impact Management System Committee Mission Report to Bugala Island,
September 2009
Wilmar Plantation Services Ltd., Self Environmental Compliance Audit, June 2007
KOPGT documents
KOPGT Progress Report, the Registered Trustees of Kalangala Oil Palm Growers
Trust (KOPGT) Secretariat, June 2007
KOPGT Annual Progress Report for 2007/08 FY, the Registered Trustees of
Kalangala Oil Palm Growers Trust (KOPGT) Secretariat, August 2008
IFAD Technical Backstopping to KOPGT Final Mission Report, May 2008,
Abdulrahman A. Maalim
Other Traditional Vegetable Oils Documents:
Value chain development and extension modalities in traditional oilseeds subsector, May 2008, Clare Bishop (IFAD consultant)
REPUBLIC OF UGANDA
MAIN REPORT
APPENDIX 3
ACHIEVEMENTS AND LESSONS LEARNED (PCO, VODP)

Appendix 3: Achievements and Lessons Learned
REPUBLIC OF UGANDA
VEGETABLE OIL DEVELOPMENT PROJECT (VODP)
APPENDIX 3
ACHIEVEMENTS AND LESSONS LEARNED
(prepared by PCO VODP)
INTRODUCTION
1.
The Vegetable Oil Development Project (VODP) is the Government of Ugandas
(GoU) strategic effort to increase domestic vegetable oil production; address rural
poverty, through the involvement of smallholder farmers in oil crop production and
cottage processing; improve the health of the population, through increased vegetable
oil intake in the villages; and address food security, through the provision of alternative
crops for income generation. The overall goal of the project is to expand production of
oil-bearing crops in Uganda, with particular emphasis on the participation of smallholder
farmers, in partnership with organised private sector processors. The project was
conceived in the context of Ugandas heavy reliance on importation of vegetable oils (up
to 80% of market supply, at the time), as well as substantially low intake of vegetable
oils by the population (leading to general malnutrition) despite the high potential for
domestic production and commercial viability.
2.
The project is consistent with the Governments policy framework that is used to
guide economic and social development in rural Uganda in particular, and the country as
a whole. The policy framework consists of: (i) the Poverty Eradication Action Plan
(PEAP), which provides the overall policy foundation for both rural and urban sectors;
(i) the Plan for Modernisation of Agriculture (PMA), which is a framework that guides
agricultural development; (iii) the recently launched Prosperity for All (PFA), a
Presidential initiative; and (iv) the Medium Term Competitiveness Strategy (MTCS),
which guides policy reforms for the private sector.
3.
The Loan Agreement between the Government of Uganda (GoU) and the
International Fund for Agricultural Development (IFAD) was signed on 26 May 1998.
The Loan became effective in July 1998 and implementation of the traditional vegetable
oil component was initiated. However, the oil palm component did not become effective
until July 2003, due to delays in securing the private sector partner which was a prerequisite for the introduction of the crop in the country.
Broad Objectives
4.
The broad objectives of VODP are:
Import Substitution through increased domestic production of vegetable oils;
Increased rural incomes hence address rural poverty;
Improve the health of the population through increased vegetable oil intake;
Export Diversification.

Specific Objectives
5.
The specific project objectives are to:
Reduce poverty and increase farmer incomes by involving smallholder growers in

the oil crop production industry;
Facilitate the enabling environment to attract private sector investment in oil

palm development with a view to reduce imports of vegetable oil and effecting
savings in foreign exchange;
Promote private sector agro-industrial investment through the introduction of

industrial oil processing mills with high environmental standards;
Improve delivery mechanisms and availability of credit and improved seeds;
Develop the potential for sunflower and the other vegetable oil seeds, and
provide interested small holder farmers, particularly women, with appropriate
technologies to optimize oil extraction from these crops;
Stimulate and support the development of the raw material base and knowhow
for the subsequent commercial extraction of essential oils;
Promote and facilitate the interaction between the interested parties through the
creation of a national industry based and, eventually, industry financed
consultative body that would advise government on the sub-sectors development
priorities.
Project components
6.
The project has three components:
i)
Oil palm Development in Kalangala with on-farm trials in the districts of

Mayuge, Jinja, Iganga, Masindi, Hoima and Bundibugyo.
ii)
Vegetable Oil Development Fund. This includes:
iii)
Essential oils development with emphasis on on-farm research and development

in Mukono, Luwero, Tororo and Lira. Crops of emphasis are citronella, geranium,
shea butter and Prunus Africana.
Traditional oilseeds enhancement in 23 districts that include: Apac, Lira, Soroti,

Katakwi, Kumi, Pallisa, Mbale, Sironko, Kapchorwa, Kaberamaido, Masindi, Gulu,
Kitgum, Pader, Amolatar Dokolo, Amuria, Manafwa, Oyam, Bukwo, Budaka,
Bukedea and Amuru. The crops of emphasis are sunflower, soybean, groundnuts
and sesame.
Institutional support which includes Project Coordination Office (PCO), Oil Palm
and the traditional oilseeds Research, Vegetable Oil Development Council
(VODC), and environment management activities.
Project implementation
7.
The Ministry of Agriculture, Animal Industry and Fisheries (MAAIF) is the lead
agency, charged with the overall implementation of the project. The Vegetable Oil
Development Council (VODC) acts as the Steering Committee for the project and
promotes the overall development of the vegetable oil industry. In addition, it provides
the overall co-ordination and direction of project implementation as well as serves as a
clearing house for VODP-funded activities. It ensures that project activities are
implemented in accordance with government policy, conditions in the loan documents
are adhered to, and the project financing complies with the government financial

regulations. Further, it is also responsible for the approval of the annual work plans and
budgets (AWP&B) and provides a forum for discussion of all the issues pertaining to the
project implementation as well as the development of the countrys vegetable oil sub
sector as a whole.
8.
The PCO manages the day to day running of the project activities. Activities of
PCO include preparation of work plans and budgets; submission of withdrawal
applications; maintenance of adequate project financial records; supervision and
monitoring of project activities, reporting and coordination of project activities
undertaken by other agencies/institutions.
9.
At the district level, project activities are carried out through the decentralised
extension system. The institutions under the National Agricultural Research Organisation
(NARO) carry out research.
Research institutes, Uganda Oil Seed Producers and
Processors Association (UOSPA) and informal seed growers carry out seed multiplication.
Activities of the ram press technology are carried out in collaboration with Appropriate
Technology Uganda (AT-U) and the district extension staff. The Uganda National Bureau
of Standards (UNBS) is responsible for quality assurance and standards of the vegetable
oils and fats.
Activities of the project
10.
The main activities of the project are:
Adaptive Research into high yielding sunflower varieties.
Multiplication and distribution of improved varieties of sunflower seed to farmers.
Providing financing to farmers for small-scale oil palm plantation development.
Targeted extension services to the farmers of oil seed crops.
Training farmers to process oil seed crops to add value, at the farm level, using
appropriate technology to raise incomes.
Training artisans and farmers how to operate and maintain simple technology for
processing (ram press technology and others).
Developing market linkages for oil seeds crops.
Production of oil palm and processing by the private sector partner.
Production of oil palm by smallholder and out-grower farmers.
For essential oils crops, they include:
Plant introductions.
Screening of potential cultivars based on yield, oil content, suitability to the

environment, market availability and resistance to diseases and pests.
Multi-location trials in different local conditions.
Commercial pilot production.
Farmer training and extension service.
Staff training in crop husbandry and analytical techniques.
Seed/seedling production and distribution.
Establishment of standard analytical services facility for the assessment of

essential oils.
Market information services and linkage with private sector.

MAJOR ACHIEVEMENTS
Traditional oilseeds sub-component
The sub-component that started in six pilot districts now covers 23 districts. Over
5,000 farmer groups have been mobilised by extension staff and this has
increased contact for delivery services. About 80,000 farming households have
benefited from the project interventions thus far.
Adaptive research activities, under the VODF, have led to the release of new
improved varieties namely PAN 7351 and sunfola for sunflower; Sesim I and
Sesim II for sesame (simsim); Serenut 1, Serenut 2, Serenut 3 and Serenut 4 for
groundnuts and Maksoy 1N and Namsoy 4M for Soybeans. These varieties have
been increasingly adopted by smallholder farmers through demonstration,
extension and training and have contributed to increased yields and total
production.
Since project start, area under sunflower has been on the increase every year.
By the end of March 2008, the annual area planted, with support from VODP, is
above 36,000 ha of the national total of about 100,000 ha. In addition to
increased planted area, yields improved as a result of enhanced extension service
delivery and the adoption of improved technologies by the beneficiaries.
Monitoring and Evaluation studies (2003) indicate farmers planting at the
recommended seed rate of about 5 kg/ha, compared to the baseline study
(1998) finding of 2.7 kg/ha. Further, the percentage of respondents that reported
planting improved varieties (hybrids and sunfola) is over 95 %, compared to 49.5
in 1998.
Participatory Planning, Monitoring and Evaluation approaches have been initiated,

involving Farmers, NGOs, Researchers and Extension staff in planning and
implementation of agricultural development. Farmer groups are able to plan and
monitor their programmes.
The promotion of local-level processing (ram press technology) has enhanced

value addition, marketing, and led to increased consumption of oil in rural areas.
While the baseline study in 1998 indicated marketing as one of the main
constraints in oil crops productions, follow-up studies show that improved
marketing due to project strategies have enhanced production of oil crops. The
Monitoring and Evaluation studies indicated that over 90% of the sunflower
produced was marketed, while the other proportion was processed locally.
Essential oils subcomponent
In close collaboration with the National Crop Resources Research Institute, the
Project has supported activities to investigate the adaptability and feasibility of
production, processing and marketing of essential oil crops including citronella,
lemon grass, geranium, shea nut trees, Prunus africana and aloe vera. While the
progress under the sub-component has been generally rather slow, mainly due to
the long time and repetitive error-and-trial processes required for the research,
as well as due to the essential/aromatic oil markets being more peculiar and
difficult to penetrate, citronella and lemon grass have, so far, registered
promising results in Tororo district and have aroused interest among farmers in
other districts.
Mother gardens for citronella grass were established in the district, in addition to
the one at NACRRI and over 650 farmers have been trained and have cultivated
over 700 acres of Citronella. A total of 2,368 litres of citronella were distilled by
March 2008. The oil was sold to local soap manufacturer(s), candle manufacturers
and insect repellent cream makers. Farmers from other districts now flock to
Tororo to learn from their fellow farmers and to get planting material.

The sub-component activities have been expanded to cover Pallisa and Lira
districts in the North.
Oil Palm Component
Progress on the nucleus estate:

Oil Palm Uganda Limited (OPUL) has to date
imported 450,000 oil palm pre-germinated seeds, bringing the total seeds
imported and raised in the nurseries to 1,350,000. About 5,000 hectares have
been planted with oil palm seedlings.
Employment and infrastructure: A total of 1545 workers were being employed by

the estate. In addition, 223 km of road network had been constructed by end of
the year and workers amenities, including staff housing, guest house, training
wings and a health centre, had been constructed.
Establishment of refinery: The 300 tonne/day oil complex in Jinja was

commissioned and is producing and packaging vegetable oil and soap for the
national and regional markets.
Development of the out-grower/smallholder Scheme: A Total of 2,500 farmers

have registered to participate as out-growers/smallholders with an estimated
3,300 hectares of land. A total of 2,010 hectares have been surveyed of which
900 hectares have been planted.
Kalangala Oil Palm Growers Trust: To Administer the Oil palm Growers Scheme,
the Kalangala Oil Palm Growers Trust (KOPGT) and the secretariat have been put
in place.
Internal tours for sensitization of farmers: Internal tours have been conducted for
farmers from different parts of the Island to the nucleus estate to get acquainted
with oil palm production.
Impact Management Systems (IMS): The Impact Management System (IMS) was
put in place to assist MAAIF oversee the implementation of the Oil Palm
Component, in relation to environmental concerns.
Oil Palm Research: Both on-the-station and onthe-farm research to address

yields, suitability, intercropping systems, environmental and natural resource
concerns is ongoing.
Institutional Support Component
Activities of the Institutional Support component are composed of those for the
Project Coordination Office, Vegetable Oil Development Council, Oil Palm research
and Monitoring and Evaluation (M&E) and Impact Management System (IMS).
Project Coordination Office (PCO): The project reports and work plans have been
prepared and submitted as required by IFAD and GoU. The PCO has continued to
provide, on a regular basis, technical backstopping to the districts through
supervision and monitoring visits. Further, the PCO coordinates and supervises
seed distribution activities and conducts national pre-seasonal planning
workshops for stakeholders in each of the years during project implementation. It
monitors project activities by the districts and other implementing agencies. In
addition, the PCO coordinates procurement of goods and services for the project,
national training workshops and international workshops. The Participatory
Planning, Monitoring and Evaluation (PPM&E) system for the project has been
established.
Vegetable Oil Development Council (VODC): The VODC acts as the Steering
Committee for the project and provides overall guidance to the PCO on project
implementation.
Ministry of Agriculture, Animal Industry and Fisheries (MAAIF): The MAAIF

provides technical backstopping and policy guidance to the project. Its top

management supervises and inspects project activities in the field on a regular

basis.
Uganda National Bureau of Standards (UNBS): The project continued to work with
UNBS and other stakeholders to ensure quality assurance and standards for the
vegetable oils and fats. VODP signed a memorandum of understanding (MOU)
with the UNBS, on 21st November 2003, for quality assurance of vegetable oils.
Mills have been inspected regularly and Guidelines for Good Manufacturing
Practices by small and medium scale oil millers were developed and are being
implemented by the millers.
IMPACT OF THE PROJECT
The VODF has stimulated agro-industrialization as evidenced by the increase in

the number of mills. For instance, in Lira, 3 mills in 1998 compared to 25 mills to
date; in Apac, from 0 to 4; in Pallisa, from 0 to 2 in Soroti and 3 in Sironko
District.
Oil crops are still major income providers in the project area. Under the VODF
component, it is estimated that over 200 000 people have benefited from
participation in project activities where they have acquired knowledge and skills,
adoption of improved technologies and improved welfare.
There has been improved household food security. Farmers have additional cash
income that has enabled them to access food from the markets rather than mere
food selfsufficiency; this is consistent with the PMA objectives.
Other impacts include acquisition of household assets, investment in other

enterprises (grinding mills, oxen, ploughs, and other cash crops), and value
addition to sunflower that has led to higher incomes are. Farmers are building
permanent and semi-permanent houses - about 300 semi-permanent houses
have been built in Kapchorwa.
Seed multiplication and distribution interventions have resulted in increased

yields for oil crops. This has been through the release of new varieties by NARO
and improved extension services. In addition, area planted to sunflower in the
project districts has increased substantially since project start-up.
As for essential oil activities in Tororo district, distillation of citronella has

increased to about 2,368 litres by March 2008.
Savings and credit groups continued to provide easily accessible credit to their
members. Besides, institutional capacity building through PPM&E has enabled
farmers to be in charge of their activities, and not just be beneficiaries as was the
case in the past.
As reported earlier, the Oil Palm component is still at the very initial stage of
development and the first harvest is expected to take place before the end of
2009. However, positive effects on stimulating the local economy, including
increased economic and employment opportunities on Bugala Island, are already
emerging. The nucleus estate is already providing employment to over 1,300
workers; improved road network that has eased transport on the island;
increased volumes of business as reflected by the number of mushrooming shops,
hotel services and the level of traffic on the steamer ship and ferry to the island.

CONSTRAINTS/CHALLENGES
The main implementation constraints/challenges have been:
Delay in securing the private sector partner for the oil palm component. Whereas
the project was declared effective in 1998, the disbursement effectiveness for this
component was in July 2003 and thus delayed implementation for 5 years.
Difficulty in getting large contiguous lands for the nucleus estate

land tenure systems.
Scattered nature of smallholder lands making consolidation, mechanisation and

management difficult.
Negative publicity about the project
Delay in concluding the Tripartite Agreement. The Tripartite Agreement that

provides the terms and conditions of service delivery between the Government,
the private sector partner and the smallholders/outgrowers took a long time to be
signed due to legalities.
Delays in developing suitable hybrids by the National Semi-Arid Resources

Research Institute (NASARRI). Research efforts have been towards developing
local hybrids, but this takes time due to the processes involved.
Deterioration of the sunfola variety of sunflower. This is an open pollinated

variety (OPV) which, although superior to local varieties, degenerates quite
rapidly.
Insecurity in some parts of the Project districts, particularly Gulu, Kitgum, Pader,
Lira, Apac, Kaberamaido, Soroti and Katakwi slowed/prevented project
implementation in the affected areas.
Erratic weather conditions that were a major challenge to project activities,

considering that agriculture is, largely, rain fed in Uganda.
Slow procurement processes.
Low soil fertility, especially in the low land districts in Eastern Uganda.
because of the
GOOD PRACTICES/LESSONS LEARNT

Developing small scale resource poor farmers is complex and a gradual process
that requires patience and time
Poverty undermines the small scale resource poor farmers to invest or re-invest in
activities that help them move away from subsistence farming and requires patience as
it takes time to learn and adopt as well as build confidence. There is need to build
capacity and support access to technologies and provide regular follow-ups to foster
adoption of knowledge and skills in a resource-constrained environment.
Promoting integrated oil crop enterprise approach to increase marginal returns
and profitability
By promoting an integrated approach of sunflower production with apiary/livestock,
returns to farmer investment are enhanced. Sunflower, itself, is an alternative source of
income besides being a source of honey. The seed cake is a rich animal feed, leading to
better quality animals
Using the existing local government structures, build the
sustainable extension service delivery by the local governments
capacity
for
By working with local governments from the onset, the project built the capacity of the
oil crops extension service delivery at the local government level that may continue

beyond the project lifespan. Collaborating with local governments has enhanced the
developing of synergies through planning, implementation and monitoring; this has
minimized duplication of VODP activities and laid a fertile ground for the sustainability of
project activities. Further, it enhanced the acceptance of the project at the community
level, since local governments are trusted, raised the commitment of the staff to work
diligently and leveraged the impact of their activities.
Collaboration and networking of key players is essential in addressing the
agricultural production and productivity challenges faced by small scale
resource poor farmers
Collaboration and networking of the project with government sector ministries, private
companies, and NGOs has facilitated the utilization of various technical competencies
and expertise to the benefit of the farmers. The collaboration and networking approach
developed by the project has fostered the appreciation of partnership building and the
integration of a shared need to solve oil crop farmer needs into the routine work
schedules of local government, private companies and NGOs at the national and local
levels.
Building community
empowerment
capacities
through
farmer
group
formation
and
Capacity building of the farmer groups by VODP has enabled the project to reach out to
a sizeable number of farmers. The Participatory Planning, Monitoring and Evaluation in
particular nurtured a sense of responsibility and pride amongst the farmers to handle
and solve their problems; this has given the communities a sense of direction, as well as
strengthened social cohesion, networking and volunteerism.
Developing of clear exit strategies and an appropriate monitoring plan to track
progress of implementation
Defining and putting in place proper exit strategies and an appropriate monitoring plan
to track implementation progress from the onset of the project is important in building
sustainable activities after the project expires.
REPUBLIC OF UGANDA
VEGETABLE OILSEEDS DEVELOPMENT PROGRAMME PHASE 2 (VODP2)

MAIN REPORT
APPENDIX 4
KEY FILES
CONTENT
Table 1:
Rural Poverty and Vegetable Oil Sub-Sector Issues
Table 2:
Institutional Capacity Matrix
Table 3:
Complementary Development Partner Initiative/ Partnership Potential
Table 4:
Target Group Typology, Priority Needs and Programme Response
Table 5:
Stakeholder Matrix: Roles And Challenges
KEY FILE TABLE 1: RURAL POVERTY AND VEGETABLE OIL SUB-SECTOR ISSUES
OIL PALM SUB SECTOR

Priority
area
Affected
groups
Issues
Acquired land for oil palm development for nucleus
estate below target
Smallholder and outgrower scheme affected by
land tenure system where majority of households
are squatters
Labour
availability
Smallholders
Outgrowers
Capacity
gaps
Outgrowers
Researchers
(esp. NARO)
Extension
staff
Financial
services
KOPGT
Bidco/ OPUL
Farmers
Shortage of labour leads to slow pace of

development and maintenance of plantations
(especially smallholders)
Knowledge gaps among researchers, extension
staff and farmers due to little in-country
experience with the crop: agronomy, harvest,
post-harvest, processing
Lack of active involvement of outgrowers in
plantation management can lead to the inability to
manage it
Risk of loan defaults by farmers
Perception of
project
All stakeholders Fears of monopoly because of one buyer-the

private sector partner
Negative publicity by environmentalists
Institutions
Farmers
KOPGT
KOPGA
Need to clarify responsibilities of KOPGT as financial

trust and service provider to farmers
Priority level
GOU/
IFAD
Identification and purchase of more land

High
Explore land leasing as an alternative to buying
Securing squatters land access/use rights through
certificate of occupancy
Sensitisation on economic and health benefits of
oil palm
Expand to include new areas to be covered by oil
palm
Develop innovative ways to mobilize local labour
High
Encourage use of cover crop to reduce labour
burden
High
Use private sector (OPUL) to build project staff
and farmer technical capacity
Tailored training and study tours to oil palm
producing countries for PCO and KOPGT staff and
farmers
Outgrower option has been eliminated
Deductions at point of sale with KOPGT making
farmer payments after loan recovery
Formal MOUs between farmers, the Trust and
Private sector partner
Provide repeated training on pricing formula to all
stakeholders
Development targeted communications materials
about how the project is implementing
environmental protection measures
Restructure KOPGT for better clarity about its
roles and responsibilities, and its interface with
KOPGA
Potential
Program
Impact
High
High
High
High
High
High
High
High
High

Appendix 4: Key File: Table 1
Outgrowers
Smallholders
Nucleus
estate
Land
availability
Actions needed
OTHER OILSEED CROPS
Priority Area
Affected
groups
Issues
Actions proposed
Priority
Level
GOU IFAD
Potential
Program
Impact
Demand for improved planting seed exceeds

supply
Limited range of seeds: only two main varieties on
market: Sunfola and PAN7351
Deterioration in quality of Sunfola - cross
pollination, poor quality supervision/inspection
during multiplication
Sunfola multiplication compromised by late release
of foundation seed from NaSARRI
Sector vulnerability because of reliance on
imported source for hybrids
Low performance of NaSARRI/NaCRRI oilseeds
breeding (development), certification and
multiplication because of limited financial support
Weak research capacity because only one breeder
per oilseed crop in Uganda
Distribution of free seeds by GOU undermines
development of agro-dealers
High
Strengthen NaSARRI/NaCRRI capacity to
undertake research into oilseeds (recruit
additional staff, ensure adequate funds for field
work
Provide funds for testing of new varieties for
prompt release
Provide funds for developing local OPVs and
hybrids, breeding for drought tolerance
Explore PPPs to sponsor seed research and seed
multiplication
Foster linkages to international research
institutions
GOU to cease supporting free distribution of seeds
in areas where sunflower production and agrodealers are now well-established
Strengthen seed certification capacity of MAAIF
High
Production
Farmers
Millers
Traders
Area planted and timely practices are limited by

shortages of: seed, farm power, working
capital/credit
Commercialisation constrained by lack of skills in
agri-business and need for food security
Soil fertility is deteriorating
Limited use of fertilizer (even on hybrid seed), not
readily available and application rates not known
Yields affected by erratic weather
High crop losses to birds, particularly in areas
where limited sunflower production
Explore feasibility of oilseed production under

High
minimum tillage/conservation agricultural systems
Explore opportunities for developing farm power
hire services (draught animals, tractors) - possibly
linked to clusters of farmer groups or farmer
associations with implements for conservation
farming
Identify appropriate methods/technologies for bird
scaring
High

NARO/
NaSARRI,
NaCRRI
All chain
actors
Seed
varieties and
supply
OTHER OILSEED CROPS
Priority Area
Affected
groups
Issues
Actions proposed
Priority
Level
GOU IFAD
High
Medium

Farmers/some extension workers not aware of

Develop mechanisms so semi-commercial
need to replenish Sunfola seed after three seasons
smallholders can obtain financing
Study on soil fertility and conservation techniques
with area-specific recommendations on fertilizer
use; dissemination of study results
Training of extension staff in the oilseeds-specific
soil fertility methods (incl. fertilizer input & soil
conservation)
Market
Farmers
Long-term storage of crushing seed constrained by Develop modalities for group bulking and
High
empower farmers to negotiate better
linkages
Millers
pests (rats)
Traders
Farmers negotiating capacity
Strengthen farmers' skills in farming as a business
Lack of trust between farmers, buyers, millers
Identify financing arrangements for marketing
Lack of transport
groups and millers
Bad roads in some areas
Explore suitability of warehouse receipts system
Purchases by traders/millers constrained by
for oilseeds sub-sector
shortage of working capital, lack of bulk marketing Develop conflict resolution mechanisms
structures and rural storage facilities
Support market information services incl. mobile
Volatile prices
phone dissemination and chain actors
participation (publishing of commercial offers and
requests)
Village-based Farmers
Ram press rejected in many communities
Smallscale processing will continue only in more
Low
processing
especially in
Oil stored in unsuitable containers
remote areas
areas further
With hard shell hybrid seed PAN 7351, less scope
Identify and operationalise suitable small-scale
away from Lira.
for village-based processing
manual and motorised facilities through
With growth of milling facilities in locality, there is
partnership agreements in local
less interest in village-based processing
manufacture/fabrication/repair
Much oilseed cake from large millers sold to
Identify appropriate financing arrangements to
livestock industry in Kenya
facilitate purchase of equipment
Promote small-scale processing through
cooperatives/associations and private enterprises
Potential
Program
Impact
OTHER OILSEED CROPS
Priority Area
Affected
groups
Medium-scale Millers
processing
Millers
Low-income
consumers
Production capacity often constrained by lack of

working capital, shortages of raw materials (see
market linkages)
Some millers not active in sourcing crushing
material wait for farmers to arrive with seed for
milling
Gaps in equipment provision and maintenance
Gaps in quality management, packaging and
marketing
No refining facilities among medium-sized millers
Shortages of seed for milling results in less
attention being paid to quality aspects in scramble
to secure supplies
Only one UNBS laboratory for testing oil quality (in
Kampala)
Sunflower oil may be contaminated at point of sale
when repacked into smaller unhygienic containers
Actions proposed
Priority
Level
GOU IFAD
Potential
Program
Impact
Undertake capacity building of millers in quality

and business management
Promote decorticators, packaging and marketing
of oil
Establish linkages to finance
Establish quality control
High
Medium
Continue support to UNBS to:

Further develop modalities for millers to costshare for testing and certification
Establish regional laboratories for testing
Review standards in light of experience
Develop regulations/codes of conduct with
penalties for non-compliance (possibly NUOMA to
help self-regulate sector)
Conduct awareness raising among district officials
and consumers about standards
Explore possibility of characterising Ugandan
sunflower in order to trade on international
market
Essential oils: establish standards & provide
training in QM
High
Medium

Quality
assurance
and
standards
Issues
KEY FILE TABLE 2: INSTITUTIONAL CAPACITY MATRIX
Institution
Strengths
Opportunities
Public institutions
Limited operating budget
Key ministry and lead sector
(poorly funded)
Development Strategy and
Distant from capital (isolated)
Investment Plan, due in 2009
Low number of staff
Staff poorly paid
Low staff morale
Lack of private marketing
expertise
Should support small-scale
Lack of marketing expertise
The Ministry has a very wide
farmer marketing
Opportunity to become proagenda
Difficult to give sufficient
active by supporting existing
entrepreneurs and the private
resources to rural marketing
Staff poorly paid which risks
sectors involvement with
marketing
to affect motivation
Plan for
Modernization
of Agriculture
(PMA)
Targets commercialization of
agriculture
Gradually being replaced by

other policies
PFA supports PMA

implementation
National
Agricultural
Research
Organization
(NARO)
and its research
institutes:
NaSARRI
NaCCRI
COREC (oil
palm)
Ugandan
National Bureau
of Standards
(UNBS under
MTTI)
Well trained research

scientists capable of good
quality work
A tradition of excellence
Land for research stations
Laboratories could be brought
back into full working order
Ten year strategic plan
(2000-2010)
Under-staffed: only one

breeder for sunflower
Lack of funds
Lack of PPPs for in-country
plant breeding
Poor level of understanding
of the commercial aspects of
agricultural research
Low salaries for scientists
Research laboratories and
farms require updating
Limited funding results in lack
of staff, equipment,
facilitation (mobility);
Has strategic plan

Donor goodwill
PMA policy focus and
commitment
NAADS provides scope for
research-farmer links
Good donor commitment
Makerere University
complements
Semi-autonomous body with

clear mandate to define,
coordinate and monitor food
standards
Low activity, few standards

set & managed
Continued support for Quality

Management System
Threats
Observations
Staff turn over

Shifts in political climate
Limited field presence due to
decentralization
Seed Certification
National Service
(NSCS) needs support
Lack of understanding of
private sector
Unclear role to support agroprocessing and rural
marketing relative to MAAIF
& MFPED
Seen as a promoter of the cooperatives in contradiction
with - private sector focus
Lack of specific budget lines for Relationship with
some of the PMA undertakings
Prosperity for All
program not very clear
Sunflower research
dependant on one breeder
Climatic shifts and weather
changes
Poor staff morale and turnover
Donor dependence
Poor financial management
and accountability
Operating on Government
vote system
Inadequate government
support could lead to stop of
activities and established
systems after project ends
Potential contractor
to DLSP at District
and Sub-county
levels
Need to work more
closely with
economists
VODP2 support should

include public funding
mechanisms which
insure sustainability of
achievements

Ministry of
Restructured to focus on key
Agriculture,
supporting roles
Animal Industry Some trained, skilled and
and Fisheries
experienced staff
(MAAIF)
Project implementation
experience
Focussed on policy and not
interventions
Ministry of
Focussed on helping private
Trade, Tourism
sector
and Industry
Already involved with various
(MTTI)
marketing interventions, i.e.
warehouse receipt, support to
co-operatives and
participation in international
trade conferences
Weaknesses
Opportunities
Has initiated PPP with millers
(Mukano) and could work
with VODP2 on oilseeds
Threats
Lack of clarity about NAADS
specific role in supporting
extension for oilseeds crop
through time
Observations
An MOU between
VODP2 and NAADS
may be needed to
clarify roles and
responsibilities for
providing extension
about oilseeds
District Local
Government
Close to the rural community

with a good understanding of
their marketing issues
Enthusiastic and increasingly
capable staff
At district level local
government has a production
department responsible for
agricultural issues
Inadequate funding and

resourcing to operate
effectively
Shortage of agricultural staff
in some districts
Poor infrastructure
No direct reporting lines with
respective departments on
national level
In position to identify
production, marketing and
enterprise opportunities for
farmers, fisher-folk and
traders
Could recruit pay for service
providers to focus on
sunflower
High dependency on central

government transfers
Insufficient capacity to
initiate and implement
Local Government is
making good effort to
help small-scale
farmers with their
production and
marketing
Vegetable Oil
Development
Council (VODC)
Linkage between private and

public sector
Limited mandate and

membership
Focus on VODP monitoring
and supervision
Experience in vegetable oil

sector
Under-representation of
smallholder interests
Continued overemphasis of
public sector activities (e.g.
extension support)
Domination of public sector
mentality
VODC unknown to
many private subsector operators
Ugandan
Established structures and
National
mechanisms of an umbrella
Farmers
farmer organization can
Federation
provide linkages to different
(UNFFE)
sub-sectors and districts
District Farmers Autonomy of umbrella
Associations
organization UNFFE allows
(DFA)
flexibility
Income generation activities
(bulk marketing and oilseeds
Organized Private Sector

High donor-dependency
Dissemination of crosscutting Collaboration generally
threatened by inefficiency
Lost funding, capacity and
messages around issues such
morale in recent resulting in
as AIDS and Gender.
and political interference
reduction in range of
activities
Capacity gaps
Possible partners for developing Funding insecurity due to
structures in:
high donor-dependency
Marketing, bulking
Processing
Extension support
Any promotion
should be very
focussed and resultoriented
Not a VODP2 priority
Farmers groups keep
shifting between
different initiatives

Strengths
Weaknesses
Based on well researched and NAADS approach does not
focus on upscaling specific
tested principles of :
commodities, but rather
Farmers empowerment
enterprise selection within
Poverty targeting
Gender mainstreaming
pre-identified agro-zones
Deepen decentralisation
Progressive shift toward mix
of public funding private
delivery of extension.
Fostering natural resource
productivity
Increasing institutional
efficiency
PPPs and market linkages
Better, well funded
programmes/ activities.
Institution
National
Agricultural
Advisory
Services
(NAADS)
Institution
Northern
Ugandan Oil
Millers
Association
(NUOMA)
Ugandan
National AgroInput Dealers
Association
(UNADA)
Ugandan Seed
Traders
Association
(USTA)
Oilseeds
Subsector
Stakeholder
Platform
(OSSUP)
Weaknesses
Lack of trust and

collaboration among
members
Gaps in organizational
capacity likely
Largest miller not part of the
association
Major institution in sub-sector Donor-dependency
Funding partly through
Poor quality management in
seed multiplication
service provision:
multiplication/sale of planting Weak relations with some
donors and processors
seeds
Has own extension structures
High acceptance by farmers
Strategic plan (2007-2010)
Substantial support by AT(U) Donor-dependency
Relatively high capacity
Weak network in rural
Knowledge transfer, training,
communities
business services, finance
Partnership with large millers
(Mukwano) in PANNAR Hybrid
seed distribution
Membership fees cover staff
Essential activities highly
dependent of donor support
salaries and operational costs
Close linkages to UOSPA
Established Quality Control
System for self-regulation,
supported by DANIDA
Informality and openness of
Lack of confidence and
platform results in strong
collaboration
general interest and high
Conflict/tensions between
large and small/medium
acceptance of platform by
most of the public and private
millers
stakeholders
Support by SNV and
Wageningen
University/Netherlands/IFAD
Opportunities
Platform for lobbying &

advocacy
Location within oilseeds
concentration area facilitates
linkages with producers
Threats
Lack of trust and conflicts

among members may
constrain collaboration
Observations
Need to form
national millers
association
Transformation into a solely

Active involvement in seed
producers association likely to
multiplication could lead to
reduce conflicts
interest conflicts within
No immediate need for
UOSPA
VODP2 support visible
Limited scope for Sunfola
Support could be aligned with
UOSPA plan
Major donor-partner
in the sub-sector
Important player in
the OSSUP
Future distribution of seeds

can be through UNADA
Seeds dont effectively reach

rural communities
Input supplier
network coverage in
VODP2 hubs to be
mapped in
collaboration with
UNADA
Support to Seeds Quality

Self-Regulation system
Support of PPP with research/
NARO and USTA
Competitiveness and lack of

confidence among members
could lead to tension and
conflicts and affect collaboration
Increased effectiveness
through modest financial and
organizational support (by
VODP2)
Neutrality and confidence in

platform needs to be
maintained
Continuing conflict/tensions
between large and
small/medium millers
Domination of
facilitation/moderati
on of platform
mainly by UOSPA

Ugandan
Oilseed
Producers and
Processors
Association
(UOSPA)
Strengths
input purchasing)
High responsiveness to
farmers needs and
acceptance by farmers
Self- funding and slim
structures
Common core-interest:
improvements in oilseeds
production and marketing
Institution
MDIs
(Microfinance
Deposit-taking
Institutions)
Commercial
Banks
Strengths
Clear legal framework (MDI
Act) and regulation by Bank
of Uganda
Experience in the
management of revolving
funds
Weaknesses
SACCOs
Infrastructure in every subcounty

Located and managed within
the communities
Industry knowledge
Plantation know-how
Leading employer and wage
payer on Bugala Island
Provides all inputs to
smallholders and training to
KOPGT
Kalangala Oil
Highly motivated staff
palm Growers
Provides financial and
Trust (KOPGT)
technical support to
smallholders interested in oil
palm cultivation
Bidco Uganda
Industry knowledge
Limited (private Financial capital
sector operator) Processing & marketing
know-how
Oil Palm
Uganda Limited
(OPUL)
Threats
Observations
Risk aversion and lack of risk

mitigation measures
constrain rural lending
Remains aloof from providing

financing for oilseeds sector
New mechanisms such

as guarantee funds are
being considered
Failure of SACCOs due to

gaps in capacity and
management
Rising energy costs increase
costs and interest rates
Faces difficulty in obtaining

sufficient land
Will not be financially self Key stakeholder and

Needs to become financially
viable and autonomous
sustaining for several years
organization for supporting
Planting slower than
smallholder oil palm growers
anticipated
on Bugala Island
Lack knowledge of oil palm
Needs CPO in Uganda to fulfil Well placed to expand public- Susceptible to negative
Leading tax payer,
growing demand for its edible
private- partnership and build
Press from environmentalist exporter and good
oils and soap
company Goodwill in
corporate citizen
Uganda

Stability due to clear
regulatory framework, sound

prudential norms, supervision
capacity of Central Bank
Opportunities
Financial Sector
High interest rates
In places without commercial
Limited product portfolio
banks MDIs could be used for
doesnt respond to farmer
channelling funds to oilseeds
demand due to capacity gaps
sub-sector
and risk-averseness
Only few MFIs certified as
MDIs
Increasing interest in small
Generally weak branch
network with limited rural
business
Openness to developing
coverage (Only Stanbic,
Centerary has moderate
innovative financial products
for oilseeds sector
branch network)
High interest rates
Risk averseness towards
agricultural sector lending
Over-dependency on
Strong government will to
government funding (PFA)
support SACCOs under PFA
and not based on the core
Potential development of
principles of running a
strong sense of ownership
cooperative
and payback obligations
Unclear regulatory framework
among the members
without clear supervision
arrangements
Oil palm Sector
Land acquisition and planting Good example of public
slower than anticipated
private partnership which
Expansion to new areas is
could be replicated
very slow
KEY FILE TABLE 3: COMPLEMENTARY DEVELOPMENT PARTNER INITIATIVE/ PARTNERSHIP POTENTIAL
Donor/Agency
Nature of Project/ Partnership Potential
Ongoing
Strong
UNADA
Ongoing
Possible
USTA/ Country-wide
Ongoing
Possible
DFAs/ Country-wide
Ongoing
Possible
Selected districts (Kibale, Kiboga

and Kumi)
Ongoing
Weak
Pilot to support farm group processing: distribution of 3 small

motorized mills
Social and economic development support for Kalangala district
East & North
Accomplished
Possible
Kalangala District
Ongoing
Good
Peace Reconstruction and Development Plan (PRDP)
North, with support for agriculture
Starting
Strong
Support to OSSUP oilseeds stakeholder platform: capacity, funding

Rural Information System: market, technology; Collaboration with
IICD, Uganda Commodity Exchange (UCE), NAADS
Agricultural Productivity Enhancement Program (APEP) (Nov 2003July 2008) followed by the new ongoing LEAD programme
OSSUP
Country-wide
Ongoing
Ongoing
Strong
Possible
National
Closed
Strong
HIV/AIDS, support programme

Support to privatisation
Strengthen civil peace building capacity
Private sector business culture promotion centres in 11 districts
Support to NARO
Support to NAADS
Support to NEMA
Northern Uganda Social Action Fund
Support to farmer groups: Processing equipment, esp. ram presses
Selected districts
Uganda Manufactures Association
Ongoing
Possible
Possible
NARO
Country-wide
NEMA
Northern Uganda
Countrywide in underprivileged
areas
Ongoing
Ongoing
Ongoing
Ongoing
Unclear
Strong
Strong
Possible
Possible
Possible
Appropriate
Technologies Uganda
AT(U)
Support to farmer groups for creation of marketing associations:

capacity, financial linkages, storage;
Support to UNADA (input supply): capacity, funding
DANIDA
Support to USTA for establishment of Quality Self-Regulation

System in the seeds sub-sector
Support to DFAs for income generation of association, especially
bulk marketing & input supply
Institutional strengthening and poverty reduction through labour
intensive approaches
Iceland Development
Assistance
Multi-donor: World
Bank, USAID and
others
SNV
USAID
UNDP
World Bank
World Vision
Status

1. Ongoing
2. Unclear
3. Started
1. National Livestock Productivity Improvement Project

2. Farm Income Enhancement and Forestry Conservation Project
3. Community Agricultural Infrastructure Improvement Programme Project 1
Development
Cooperation Ireland
(DCI)
FAO
1. MAAIF; 29 Districts in cattle

corridor
2. Nordic co-finance; 36 N/E
Districts
3. 26 Districts in Central/East
Country-wide
Complementarity/
Synergy Potential
1. Possible
2. Weak
3. Strong
African Development
Bank
Intervention/Coverage
KEY FILE TABLE 4: TARGET GROUP TYPOLOGY, PRIORITY NEEDS AND PROJECT RESPONSE
Oil palm sector

Typology
Constraints & Priority Needs
VODP2 Responses
Primary target groups
Smallholder
farmers
Small
landholders
able to
become oil
palm farmers
Women and
youth

10
Indirect target
groups are
nucleus estate
workers and
labourers on
smallholder
gardens
VODP2 to seek ways for smallholders and outgrowers to secure land titles.
For squatters in particular security of tenure of their plantations
Financing to establish and maintain oil palm gardens prior to
Continued efforts to so that sufficient land is kept aside for food production
maturity (5 years)
Capacity building household capacity in financial and business management so men,
Extension services and skills development in oil palm planting,
women and children can benefit
maintenance and harvesting
Ensure that cash payments for labour are made only after satisfactory inspection.
Timely access to inputs and labour
Maintain/improve gender balance in units and related committees
Group organisation , leadership training and PPM&E
Continue participatory planning, monitoring and evaluation and promote FAL
Sufficient extra land for food crop production
training.
Household planning and financial management skills and access
Support other initiatives that are promoting a culture of savings.
to FAL classes
Continue to ensure that gender and HIV/AIDS considerations are taken into account
HIV/AIDS sensitisation
Work with OPUL to promote skills development in household, planning savings and
Health and safety at work
Skills development in oil palm production, maintenance and
remittances
harvesting
Encourage OPUL to complete its programme for education facilities for children of
Safe accommodation of acceptable standard
workers and encourage attendance at FAL classes
Opportunity to settle in locality, if so desired
Mainstream HIV/AIDS awareness and gender into its compliance with health and
Access to education, health and other basic services
safety rules at work
Household planning
Request gender disaggregated data on nucleus estate workers.
Savings and remittance mechanisms
KOPGT to help labourer develop skills in oil palm management and have work in
Access to FAL classes and HIV/AIDS sensitisation
smallholder gardens
Living in close quarters and away from families increases risk of
HIV/AIDS
Educational facilities are not easily accessible presently for
workers children in most of the camps
Secondary target groups
Women face constraints as head of households and as oil palm
Women and youth will be encouraged to assume group leadership roles
farmers
Training in household financial management and planning
Youth should be included in oil palm activities
HIV/AIDS sensitization
Other oilseed crops

Typology
All smallholder
oilseed farmers
11
Key characteristics: Cash crops (cassava, maize, groundnuts),

cultivate 4-10 acres, able to hire oxen and farm labour, own 1-2
cows, 2-3 goats, several chicken;
Production mostly limited by lack of finance, farm power and
inputs (e.g. seeds, fertilizer)
High harvest losses due to birds eating the crop
Lack of transport and bad roads
Lack of market structures (bulk marketing, storage) emphasized
Semi Key characteristics: Cash income from employment, pensions,
commercial and
remittances, crops (cassava, maize, groundnuts), cultivate more
commercial
than 10 acres, own draught animals, hire labour, own a bicycle
smallholders in Need for technical knowledge (fertilizer management, hybrid
oilseed
seeds)
concentration
Production mostly limited by lack of finance and farm power
areas
Vulnerable Groups
Women and
In male-headed households (HH) often excluded from produce
women-headed
marketing and thus limited cash, income opportunities and say
households
regarding HH budget
Women-headed households
Widows economically and socially disadvantaged
Widowhood often exposes women and their dependants to claims
on assets by relatives, turning them destitute
General labour constraints
Unequal access to assets and services
New entrant
and more
remote oilseeds
smallholders
Potential VODP2 Responses

Production
Explore feasibility of oilseed production under minimum tillage/conservation
agricultural systems
Explore opportunities for developing farm power hire services (draught animals,
tractors) - possibly linked to clusters of farmer groups or farmer associations
Explore opportunities for farmers to access financing
Improved post-harvest handling and bird-scaring
Processing
Promote small-scale processing through groups and private enterprises
Research into hybrid varieties suitable for pressing using village-based equipment
Manual and motorised equipment suitable for village-based use
Identify appropriate financing arrangements to facilitate purchase of equipment
Promote storage and packaging capacity
Marketing
Strengthen farmers' skills in farming as a business
Promote bulking and strengthening farmers' negotiating position
Link farmer groups with bulk marketing initiatives and identify financing
Support market information services incl. mobile phone dissemination
Continue promotion of high-quality OPVs and where relevant improved villagebased processing
Promotion of soil conservation techniques (minimum tillage)
Appropriate bird scaring methods/technologies: Identify and support dissemination
Close coordination with infrastructure projects
Emphasized promotion of bulk marketing & small- and medium-scale processing
Promotion of hybrid seeds, effective input management (eg fertilizer) and soil
conservation techniques (minimum tillage)
Explore potential of running farm power hire services
Explore opportunities for developing farm power hire services (draught animals,
tractors) - possibly linked to clusters of farmer groups or farmer associations
Explore opportunities for farmers to access seasonal agricultural credit
Introduction of Zambian Household Approach for Agricultural Extension and Gender

Mainstreaming
Emphasize women integration & increase number of women among group leadership
Promote farmers organizations support activities for female headed households
engaged in vegetable oil sub-sector in resolving short-term crises
Increase employment opportunities in the vegetable oil sub-sector
Provide information on technical and cross-cutting issues through radio


Production: Seeds supply often not in time, quality of Sunfola
seeds declining; Soil deterioration; Poor input management;
Lack of farm power, finance; Crop losses to birds and gaps in
post-harvest handling;
Processing: Manual ram presses perceived as physically too
demanding
Storing: Long-term storage of seed constrained by pests (rats)
Marketing: Farmers often in weak negotiating position with
traders/millers because of immediate need for cash, lack of
marketing options and lack of bulking, lack of market
information, lack of business skills;
Other value chain stakeholders

Typology
Seed
companies

No in-country breeding of seeds/dependency of seeds imports

Direct private sector support
Lack of capital to invest in own breeding programs
Support to seeds quality self-regulation system implemented by USTA
Side-selling of contracted seed-multipliers results in major

losses for seed companies
Explore financing options for sustainable multiplication of foundation seed for

multiplication
Neglecting quality measures (e.g. mixing of certified seed with

regular seed) in order to undercut prices results in poor quality
planting seed for farmers
Establish linkages to credit/finance for increased need of investment and working

capital
Lack of finance/working capital
Improved public sector support

Lobby for greater public sector support in oilseeds research
Strengthen NASARRI capacity to undertake research into oilseeds (recruit staff,
adequate funds for knowledge building)
Provide funds for testing of new varieties for prompt release and for developing
local OPVs and hybrids
Explore and facilitate PPPs to sponsor seed research and seed multiplication
Foster linkages to international research institutions
Explore information and coordination needs as well as measures for demand
forecasts in collaboration with UOSPA, NUOMA, USTA
12
Input
distributors
and dealers
(incl. seeds)
Development of agro-dealers undermined by distribution of free

seeds through government extension
Lack of business skills and working capital
Millers
General constraint: shortages of raw materials due to low

production and lack of market linkages
Lack of trust, collaboration and organizational capacity
Conflict between large millers and small & medium
millers/UOSPA
High oilseeds price volatility
Lack of market information
Gaps in equipment provision and maintenance leads
inefficiencies such as low oil extraction rates and thus low-value
cake
Production constrained by the lack of working capital &
shortages of raw materials (see market linkages)
Some millers not actively engaged process - wait for farmers to
arrive with seed for milling
Gaps in quality management, packaging and marketing
No refining facilities
Small (< 10
tonnes/day)
&
Medium (< 50
tonnes/day)
Promote linkages/collaboration between seed companies and private input dealers

Provision of business development services to input dealers and linkage to finance
Targeted support in collaboration with UNADA (eg oilseeds-specific technical training
of input dealers)
Explore options of expanding stockist network through farmer structures (e.g.
model farmers)
Promote bulk marketing and explore options of contract/floor price arrangements
Identify modalities for resolving disputes, such as code of conduct for industry, and
possible role for government as arbitrator
Support market information services incl. mobile phone dissemination and chain
actors participation (publishing of commercial offers and requests)
Promote oilseeds production (see Farmers)
Promote equipment manufacturers skills and link them to millers (eg through
market information services)
Promote the use of decorticators by millers
Promote seed cake to poultry industry
Build capacity of millers: Business incl. marketing, processing techniques & quality
management
Explore options of contract/floor price arrangements between millers and farmers
Chain integration measures such as: support of OSSUP
Identify appropriate financing arrangements to facilitate purchase of equipment incl.
oil refining, e.g. through millers associations
Promote storage and packaging capacity

Information gaps/ insecurity concerning next seasons demand

lead to insufficient seeds production/provision
Typology
Large (> 50
tonnes/day)
Traders
13
Research
institutes
(Seed breeding
and planting
material
provision)
Cumbersome and inefficient buying due to the lack of bulk

marketing structures
Lack of storage, cleaning, drying and grading facilities
High cost and cumbersome purchase of transport services due
to the lack of organization and bad roads
Quality gaps due to absence of awareness and regulations
Lack of working capital/finance
Bad roads leading to increased transport times and costs

Lack of working capital/finance translates into car maintenance
gaps
Lack of market organization, transparency & information leads
to inefficiencies
High seasonality emphasized by lack of storage facilities and
bulk marketing
Limited resources: staff, facilities, equipment
Managerial gaps
Remote location of NaSARRI not attractive to scientists: need of
incentives
Long distances to on-farm trial fields, due to low concentration
of sunflower around NaSARRI research station
Limited range of seeds: only two main varieties on market:
Sunfola and PAN7351
Deterioration in quality of Sunfola-problems with cross
pollination, poor quality supervision/inspection during
multiplication
Sunfola multiplication compromised by late release of
foundation seed from NASARRI
Soya beans: insufficient availability of improved varieties

Link with bulk marketing systems
Explore options of contract/floor price arrangements between millers and farmers
Link with bulk marketing systems
Support market information services incl. mobile phone dissemination and chain
actors participation (publishing of commercial offers and requests)
Promote oilseeds production (see Farmers)
Identify appropriate financing arrangements for increase of working capital and
storage
Promote storage, quality enhancement and packaging capacity
Build capacity: Business & quality management
Coordinate support with other agricultural development projects
Coordinate support with infrastructure projects and other agricultural development
projects
Support market information services incl. mobile phone dissemination &
transporters diary
Support bulk marketing
Extra promotion efforts for sunflower cultivation around NaSARRI

Diversification of seeds breeding, e.g. by promoting a program at Makarere
University
Promotion of better coordination among oilseeds breeders, initiatives/programs and
its funding sources, e.g. by an annual stakeholder meeting
Soya beans: Support of breeding program at NaCCRI
Essential oils: Support continuous evaluation of elite varieties

Transporters

Side-selling of contract farmers due to high price volatility
KEY FILE TABLE 5: STAKEHOLDER MATRIX: ROLES AND CHALLENGES
OIL PALM
Stakeholders
Bidco Uganda
Limited (BUL)
Public sector
Role in Oilseeds Sub-Sector
Challenges
Future Role
Private sector company (ltd. by

shares), created by the Kenyan Bidco
Oil Refineries ltd. and other partners on
the basis of an agreement with GoU
(2003) in order to develop palm oil
production in Uganda
Holds 90% of OPUL shares
Leading employer and wage payer on

Bugala Island
Need to focus more on their corporate Identification and

social responsibility role in the
purchase of more
land
cultivation of oil palm in Uganda
Susceptible to negative Press from
Explore land
leasing as an
environmentalists
Land acquisition and planting slower
alternative to
buying
than anticipated due to
Faces land tenure issues
Vigorous publicity
on project
activities
Formed: 2004
Objective to develop 40000 ha oil palm

plantation with 26 500 ha for OPUL and
13 500 ha for smallholders
Land acquisition and planting slower

Identification and
than anticipated
purchase of more
Difficulty in two parties understanding
land
each others needs and constraints
Shares: 90% Bidco, 10% KOPGT

Private oil-producing company on the
basis of public private partnership
14
Board with 12 members, Bidco (10),

KOPGT (1), GoU (1);
Provides inputs and extension to KOPGT

who in turn supply smallholders interested
in oil palm cultivation
Kalangala Oil
palm Growers
Trust (KOPGT)
Operational: 2006
Funding: VODP/VODP2 with objective
of self-sustainability from 2015
Organization representing the interests
of oil palm growers with OPUL
Holds 10% share of OPUL
Key stakeholder and organization for

supporting smallholder oil palm growers on
Bugala Island, together with KOPGA
Vegetable Oil
Development
Council (VODC)
Formed: 1999 by MAAIF
Activities: integral part of VODP

implementation (overseeing VODP and
approving the annual budget).
Objective: oversee and give guidance to

VODP and development of sub-sector.
Membership: includes representatives
from MAAIF, MOFPED, MTTI, NARO,
UNFFE and UOSPA appointed by
Government.
Continued funding
Community
mobilization
Tech. assistance
to build
organizational
capacity and
Capacity needs organizational and
knowledge of oil
technical capacity building for oil palm
palm industry
Limited mandate and membership.
Continue as Project
Steering Committee
Focused more on VODP
for VODP2.
implementation rather than guiding
sub-sector.
Dependent on external funding for
several years
Land planting slower than anticipated
Need to put in place long-term
business plan and secure selffinancing for sustainability
Not legally established.

Reliant on VODP for funding support.
Uganda:
Vegetable
Oil Development
Project
Phase 2
Uganda:
Vegetable
Oil Development
Project
2 (VODP2)
Project
Design Document
Project Design
Document:
Main Report
Working
Paper
5: Oilseeds
Development
Appendix
4: Key
File: Table
5
Oil Palm Uganda

Limited (OPUL)
Description
OTHER OILSEEDS
MAAIF Seed
Certification
Service
Hosted: MAAIF
Status: Government agency embedded
in MAAIF
Objective: To ensure the production of good Inadequate capacity for inspecting

quality seed of improved varieties and
seed quality
hybrids for the oilseeds sub-sector.
Limited funding to carry out seed
certification services
Low levels of awareness by the
farming community about the value
of using quality seed
Hosted: MAAIF
Status: Government agency embedded
in MAAIF
Objective: To ensure the registration of

agro chemicals, import permits, and SPS
requirements for import and export of seed
and crushing material.
Limited funding to carry out

regulatory services
NaCRRI (NARO)
Funding: NARO, project-related funds

(VODP).
Status: Research institute embedded in the

semi-autonomous NARO.
Mandate: to promote soybean production
by supplying foundation seed to seed
companies to multiply and sell to farmers.
Functions:
Testing/approval of imported seeds.
Breeding of new, well adapted varieties.
Current activities (VODP-funded):
To ensure in-country availability of high
yielding, drought-tolerant and pestresistant planting material.
Release of 3 new soybean varieties.
Oilseeds/soybean is still of low priority

within NARO.
Under-funding characterised by:
Poor status of equipment and work
facilities.
Limited working capital for
breeding/development of new seeds
Poor linkages with international
research organisations.
Lack of qualified researchers with
appropriate knowledge in seed
breeding.
Lack of systematic collaboration with
private sector.
Pesticides and plant

health inspection for
oilseeds subsector.
VODP2 to sign
MoU with NARO
for continued,
targeted support
of research and
knowledge
transfer activities
for soybean.
Uganda:
Vegetable
Oil Development
Project
Phase 2
Uganda:
Vegetable
Oil Development
Project
2 (VODP2)
Project
Design Document
Project Design
Document:
Main Report
Working
Paper
5: Oilseeds
Development
Appendix
4: Key
File: Table
5
15
MAAIF Crop
Protection
Department
Specific support
under VODP2 for
training and
equipment for the
seed certification
service for oilseeds.
Vegetable Oil
Department,
NaSARRI
of NARO
16
Status: Research institute embedded in the

semi-autonomous NARO.
Mandate: to promote traditional oilseeds
including sunflower, sesame and groundnuts.
Functions:
Testing/approval of imported seeds,
including hybrids
Breeding of new, well adapted varieties
and hybrids
Current activities (VODP-funded):
To ensure in-country availability of high
yielding, drought-tolerant and pestresistant planting material.
Release of 3 new sunflower hybrids, which
are expected to be on the market in 2010.
Currently provides UOSPA with Sunfola
breeder seeds for multiplication.
Oilseeds/sunflower is still of low priority

within NARO.
Under-funding is characterised by
insecurity and delays:
Poor status of equipment and work
facilities.
Limited working capital for
breeding/development of new seeds
Poor linkages with international
research organisations.
Lack of qualified researchers: only
one staff with appropriate knowledge
in seed breeding.
Lack of systematic collaboration with
private sector.
VODP2 to sign MoU

with NARO for
continued, targeted
support of research
and knowledge
transfer activities
for sunflower.
Formed: 1983 under MTTI
Activities: Collaboration with VODP since

2003:
Limited funding results in lack of

staff, equipment, facilitation
(mobility).
Continued support
to UNBS to develop
and strengthen
quality management
system.
Status: Semi-autonomous body with

National Standards Council as policymaking body.
Standardisation of oils, quality assurance.
Mandate: definition, coordination and

monitoring of food standards.
Sensitisation of producers, processors,

traders and public extension about quality
standards.
Staff: 106 in total of whom 70% are

technicians.
VODP support: Training of staff, testing

equipment.
Uganda:
Vegetable
Oil Development
Project
Phase 2
Uganda:
Vegetable
Oil Development
Project
2 (VODP2)
Project
Design Document
Project Design
Document:
Main Report
Working
Paper
5: Oilseeds
Development
Appendix
4: Key
File: Table
5
Uganda National
Bureau of
Standards
(UNBS)
Formed: 1992
Funding: NARO, project-related funds
(VODP).
KEY FILE: TABLE 5: STAKEHOLDER MATRIX: ROLES AND CHALLENGES
Stakeholders
Oilseeds Subsector
Stakeholder
Platform
(OSSUP)
Description
Formed: 2007
Hosted: SNV (on temporary basis).
Backstopping support: Wageningen
University, The Netherlands, Makarere
University.
Status: national platform and regional
platforms in north and east.
Formed: 1992, since 1994 funded by
Danida until 2006; currently mostly
project-related funding from a variety of
sources. Membership fees from 72
member organisations.
Status: Umbrella organisation of
independent farmers associations;
democratically elected legislation; evolved
from UNFA to UNFFE in 2002.
17
Services: lobby and advocacy, training

and extension, agribusiness development,
information and communication, M&E.
District
Farmers
Associations
(DFA)
Status: since 2002, independent

associations at district level, autonomous
of umbrella organisation UNFFE.
Northern
Uganda Oil
Millers
Association
(NUOMA)
Formed: 2005, organised in UOSPA with

intention to separate in medium terms.
Ugandan
Oilseed
Producers and
Processors
Association
(UOSPPA)
Funding: mainly by DANIDA.
Status: Informal, open platform, composed of

oilseed industry players (millers, farmer
organisations, financial institutions), donors
and Government.
Objectives: To provide a place to identify
challenges and appropriate measures to
facilitate sub-sector development and
coordination.
Challenges
Potential Role in
VODP2
Conflict/tensions between large and
To promote business
small/medium millers.
linkages among
Dominance by one or two key players stake-holders for
long-term
(e.g. UOSPA) could affect neutrality
sustainability.
and confidence in platform; external
moderation (e.g. by VODP) could
increase confidence and legitimacy.
Activities:
Donor-dependency.
Programme promoting sunflower (2006/07),

sesame and cotton in four districts, funded
by Royal Netherlands Embassy with on-farm
demonstrations and extension support,
mainly for OPVs.
Lost credibility, funding and capacity

in recent years due to low
performance.
Member of Oilseeds Sub-sector Stakeholder

Platform.
Representative sits on VODC.
Functions:
Extension service.
Under-funding has resulted in

reduction in range of activities (e.g.
paying limited attention to farming as
a business, ceasing yellow and blue
certificate schemes for farmers).
Still need for support to become selfsustaining.
Potential service
provider under
contracts
Need to separate from UOSPPA to

form own national association.
Potential service
provider under
contracts
Bulk marketing and input purchasing of

oilseeds in districts of Masindi, Lira, Apac.
Function: Lobbying and self-regulation.
Funding: membership fees.
Member: Oilseeds Sub-sector Stakeholder

Platform.
Members: 25 medium and small millers.
Interests:
Maximum collective capacity: 250

mt/d of all members; in contrast
Mukwano 200 mt/d & Mount Meru 300
mt/d.
Pro: Bulk-marketing; agro-credit for millers,

support for seed research.
Contra: Local and bulk-processing.
Formed: 1995, as an association of

Ugandan oilseeds processors and
producers; mainly initiated by USAID and
on the demand of processors.
Status: Major facilitating institution in subsector; intends to transform into a solely

producers association.
Donor-dependency.
Functions: (i) institutional support, (ii)

training (production, processing & marketing)
and integration of farmers in value chain,
fostering processing and marketing, (iii)
support of research, (iv) develop its own
Lack of trust/credibility may constrain

collaboration.
Funding: formerly mainly through

international donors, membership fees
and the multiplication/sale of planting
seeds.
Potential service
provider under
contracts
Lack of trust may constrain

collaboration.
Quality management in seed

multiplication.
Potential service
provider under
contracts

Uganda
National
Farmers
Federation
(UNFFE)
Membership Organisations
Role in Oilseeds Sub-Sector
KEY FILE: TABLE 5: STAKEHOLDER MATRIX: ROLES AND CHALLENGES

Objectives: to support improvement and
growth of production of oilseeds to feed
milling industry.
Coverage:
12 districts
62 millers
947 farmer groups (each with between
2 - 30 members).
150 farmer field schools for
piloting/training in new technologies
and seed multiplication
Uganda
National AgroInput Dealers
Association
(UNADA)
Lobbying the interests of producers and

processors.
Extension: operates with own extension
staff; training of public extension; service
delivery under NAADS.
Planting seeds (Sunfola) multiplication (out
grower scheme) and distribution, in
collaboration with VODP.
Member: (i) Oilseeds Sub-sector Stakeholder
Platform (ii) UNFFE.
Description
Formed: 2003
Role in oilseeds sub-sector

Activities:
Composition: regional associations, a

national assembly which elects national
board of directors, which is supported by
a secretariat.
Distribution of hybrid seeds, imported by

Mukwano.
Status: National apex organisation for all

agro-input dealers.
18
Funding: AGRA, AT Uganda, membership

fees.
Strategic partnerships: USAID APEP,
Private sector Foundation, USTA,
Rockefeller Foundation, Danida ASPS and
NAADS.
Uganda Seed
Traders
Association
(USTA)
Main activities:
Role for VODP 2

Potential service
provider under
contracts
No international research institute

specialised in sunflower and sesame
oilseeds.
Potential service
provider under
contracts
Training (business management, new

products, group and association
development).
Knowledge transfer: trade fairs,
demonstrations, advertising.
Marketing (market information, bulk
purchase, delivery services).
Credit linkages (guarantees for qualifying
members).
Formed: 1999
Members supplying vegetable oil seeds:

Monsanto, AK-Oils (Mukwano), Victoria Seeds,
Funded: Mainly by DANIDA and
USAID/APEP; membership fees cover staff Otis Garden.
Activities:
salaries and operational costs.
Members: 12; largest companies include
FICA, NASECO, Monsanto.
Challenges
Donor-dependency.
Quality Control System for self-regulation,

supported by APEP and DANIDA, to become
operational in 2009 in order to compensate
for low performance of National Seed
Certification (MAAIF).
Aim to restructure sub-sector with higher
level of specialisation, with each company
producing a limited range of foundation
seeds which would be available for
multiplication by others.
Lobbying to ensure vegetable oils
appropriately recognised by public sector.
Lack of support makes in-country

breeding very expensive.
Neglecting quality measures (e.g.
mixing of certified seed with regular
seed) in order to undercut prices
results in poor quality planting seed
for farmers.
Side-selling of contracted seedmultipliers results in major losses for
seed companies.

Stakeholders
organisational capacity.
REPUBLIC OF UGANDA
MAIN REPORT
APPENDIX 5
LOGICAL FRAMEWORK, IMPLEMENTATION MATRIX
AND ORGANIZATION CHART
LOGICAL FRAMEWORK: VEGETABLE OIL DEVELOPMENT PROJECT, PHASE 2 (VODP2)

(*denotes a RIMS indicator. All qualified indicators will be gender disaggregated)
Narrative Summary
Means of Verification
Assumptions/Risks
Verifiable Indicators
Goal:
Contribute to sustainable poverty reduction
in the project area.
Development Objective

Level of vegetable oil self-sufficiency increased from 30% (2008
Increase the domestic production of
baseline) to over 60% by project completion (2018).
vegetable oil and its by-products, thus
raising rural incomes for smallholder

Domestic oilseeds production increased from 70 000 tonnes in
2008 to 150 000 tonnes by 2018.
producers and ensuring the supply of

Increased per capita vegetable oil consumption from 5.6
affordable vegetable oil products to
kg/capita in 2008 year to 7.0 kg by 2018.
Ugandan consumers and neighbouring

Oil palm and oilseeds profitably produced by smallholders.
regional markets.
1. Outcome: Oil Palm Consolidation and Expansion
An integrated oil palm industry to supply

40 000 ha for oil palm plantations identified by 2018, 20 000 ha
national and export markets in compliance
planted of which 7,000 ha by to smallholders.
with modern environmental standards and

Crude palm oil annual production increases from 0 tonnes in
2009 to 35 000 tonnes by 2018.
providing equitable returns to smallholder
producers.

All oil palm activities (plantation, mill and refinery) are in
compliance with NEMA regulations.

Smallholders receiving import parity prices for FFBs and earning
incomes of USD 1 500 ha at full development.
OUTPUTS
Kalangala Oil Palm Scheme completed and
6 050 ha of nucleus estate planted in Kalangala
producing

4 700 ha planted by smallholders by 31 Dec 2016 with about
1 700 smallholders accessing KOPGT advisory services*.

KOPGT re-structuring agreement signed by 31 Dec 2013.

Four island environmental monitoring plans for smallholder oil
palm completed and being implemented*.

6 500 ha nucleus estate planted by 2017 on Buvuma.
Buvuma Oil Palm Scheme established

BOPGT will be established within six months of agreement with
OPUL to start the nucleus estate on Buvuma.

3 500 ha smallholder land planted by 2018 and 1 100 farmers
accessing advisory service*.

Oil palm mill constructed by 2017.

Feasibility plans completed and agreed with OPUL by 2014 for
New oil palm areas identified
achieving the remaining balance of the area Contained in 2003
Agreement.

RIMS Baseline, and Completion

Surveys.
Uganda Bureau of Statistics.
Oilseeds and oil palm

continue to be a strategic
crop for the Government.
UBOS statistics on Ugandan

vegetable oil production.
Household Impact Assessment
Survey.
Project M&E database.
Baseline studies and PCR.
FAO food balance sheet
Absence of external and

internal economic shocks.
Data available from private
sector producers.
OPUL and KOPGT databases

KOPGT reports
Project M&E database
Reports from the environmental
Impact Monitoring System
Reports from the Pricing Committee
on FFB prices
Project progress reports and M&E
database
OPUL and KOPGT databases
KOPGT reports
BOPGT progress reports
Special studies

Liberal economic policies

continue.
OPUL maintains its
commitment to oil palm
development in Uganda.
No drastic price changes
in the international
vegetable oil market.
Ferry service established
to outlying islands
GoU able to purchase
sufficient area of land for
nucleus estate on Buvuma
Ferry service to Buvuma
upgraded
No extreme climate or
disease events affect
palms
Trial planting successful
and identified areas have
land in blocks suitable for
nucleus estate and
smallholder development
More smallholder demand
than estimated, project
financing is not enough
Uganda: Vegetable Oil Development Project, Phase 2 (VODP2)

Appendix 5: Logical Framework
50% of households with improvements in assets ownership

index at project completion*.
20% reduction in the prevalence of child malnutrition, by gender
(height/age, weight/age, weight/height)*.
2. Outcome: Development
Continued up-scaling of Lira to a modern agroindustrial hub for oilseeds and the emergence of
Eastern Uganda, Gulu and West Nile as hubs
for oilseed providing inputs to farmers and
milling, remunerative prices to farmers.
OUTPUTS
OSSUP helping oilseeds stakeholders to
effectively coordinate among themselves
Mill capacity utilisation increased from 30% in 2009 to 85%

by 2018, with establishment of second solvent plant.
Farmers growing oilseeds increased from 55 000 in 2008 to

140 000 by 2018, with net cash earning per ha of US$350.*
Two improved varieties for each oilseed crop released by
2012 by NaSARRI and NaCRRI, and two each year after.
90% of oilseed growers, even in remote hubs of Arua and
Gulu, buying certified hybrid seed commercially by 2014
Improved oilseed production practiced on 140 000 ha by
2018, up from 80 000 ha in 2008, average yield of 1.1t/ha
2900 farmer groups (with 30% participation of women)
receiving extension services by 2015 and 5900 groups
supported over project life.*
140 000 farmers (30% w) trained in conservation farming
and sustainable land management, 60% applying
techniques including fertiliser by 2018.*
Average moisture content of oilseeds delivered to mills
reduced from 14% to 10%.
1,000 farmer groups bulk selling and receiving 15% price
premium by 2015.
150 farmer groups practicing intensive sunflower production
(hybrids with fertiliser) by 2015 on credit.*
50% farmer groups use oilseed MIS by 2015.
3 new clusters providing 70% of oilseeds production.
90% of the medium/large-scale millers attain UNBS quality
certification by 2018.

Farmers buying good quality hybrid seed for

sunflower and soybean

Smallholders farming oilseeds as a business

and operating in groups to sell increasing
volumes of crushing material to millers

Production, consumption and import

statistics from UBOS
UOSPA/UNAFFE/OSSUP statistics
VODP2 progress reports
Mid-term/project completion reports
NaSARRI/ NaCRRI/MAAIF Seed
Certification agency reports
UBOS survey reports
Seed import statistics
OSSUP reports

DAO quarterly reports

NAADS technical reports
Impact assessments and surveys
VODP2 progress reports

DAO quarterly reports

MAAIF farm survey reports
Impact assessments and surveys
VODP2 progress reports using
information from millers, UBOS and
UNBS reports, and mobile service
provider

3. Outcome: Project Management

Project Management helping farmers to provide
growing amounts of crushing material for
processing in edible oil and earning better
incomes
OUTPUTS

Project Management fully operation
Oil seeds sub-sector platform (OSSUP)

providing forum for stakeholders.
No disease outbreaks.
Farmers increase
production of soybean
Industry coping with 1 in 5
yr extreme weather event
NaSARRI and NaCRRI
release new Ugandan
varieties. If not,
millers/seed companies
import hybrids
Continued satisfactory
security in Northern and
Eastern regions
NAADS and VODP2
collaborating for extension
Millers and other private
operators willing to
undertake extension
provision on a cost
sharing basis
Increased crushing
material attracts new
investment in hubs.
Guarantee fund
established
Voluntary miller
compliance with UNBS
standards
Acceptance of new market
information dissemination
system.
IFAD loan 55% disbursed by 30 June 2015 and 99% by 31

June 2019

VODP2 progress reports.

IFAD loan disbursement report
Audit reports in line with IAS.
IFAD Financing is
available

Full staff of qualified professionals working as a team

Timely preparation and execution of AWPB.
Timely submission of withdrawal requests.
PMU submits draft Government policy documents on oil
palm and oilseeds to MAAIF by 2013..

Audit reports
PCO financial reports
VODP2 project progress and M&E
reports
PCO staff are dynamic

and competent.
Stakeholders buy into
project-supported
activities.

Appendix 5: Logical Framework
IMPLEMENTATION RESPONSIBILITIES MATRIX1

Component
Oil Palm
Development
Output
Consolidation and
Expansion Kalangala
Identification of New Areas
Oilseeds
Development
Seed Production
Extension for Farmer

Groups
Other value chain activities
Bugala Island Smallholder development

Undertake ESIA outlying islands
Establishment of ferry to outlying islands
Smallholder plantation development outlying islands
Gender and HIV/AIDS mainstreaming
Undertake ESIA
Establish ferry service
Nucleus estate start-up
BOPGA/BOPGT establishment
Farmer plantation development
Palm trials in areas identified and rainfall monitoring
Determination with local governments about land
availability for oil palm plantations
Feasibility studies
Annual seed quantity estimates
Provide foundation seed parent lines for soybean and
sunflower
Seed multiplication and sale of certified seed
Identification and development of extension themes and
approaches for oilseeds
TORs for contracting Pay-for-Service providers
Extension training of farmers in production technologies
Training of farmers in farming as a business and financial
skills
Input supply
Bulking/post harvest
Mechanization
Financing for farmers, intermediaries and millers

Guarantee fund for weather risk and financing for farmers
and millers
Market information
Edible oil for oilseeds quality control
Stakeholder consultation/facilitation
Sector Policy documents
See Working Paper 7 Project Implementation for a description of implementation responsibilities
Responsibilities
KOPGT /OPUL
PMU/NEMA
GoU/MOW/KDLG
KOPGT/OPUL/farmers
PMU/KOPGT/OPUL
PMU/NEMA
GoU/MOW/InfraCo/MDLG
OPUL
PMU/MPLG/KOPGT
BOPGT/OPUL/farmers
PMU/BOPGT/OPUL
PMU/COREC
PMU/District LGs
PMU/OPUL
OSSUP with millers and seed companies
NaSARRI, NaCRRI
Seed companies, NSCS for seed quality

PMU working with other stakeholders (including
NAADS) and other donors
PFS providers contracted by PMU

PFS providers
Seed companies, agro-dealers and input suppliers

Farmers with PFS extension providers, quality
control by UNBS
PFS providers contracted by PMU
PMU and agreed upon financial institution
PMU with project partners
Financial institutions with VODP2 guarantee fund
PMU
Mobile services providers
UNBS district LGs
OSSUP
PMU

Appendix 5: Implementation Responsibilities Matrix

Buvuma
Activities
PROJECT ORGANIZATION CHART
Bidco
OPUL
MFPED
MAAIF
PMU
OSSUP
Oilseeds Development
2
Kalangala
Consolidation
OPUL
KOPGT/KOPGA
Kalangala LG
NEMA
Buvuma
Development
New Areas
Identified
OPUL
BOPGT/BOPGA
Mukono LG
NEMA
PMU
COREC
LGs
NEMA
OPUL
Seed Production
and Distribution
Extension for
Farmers
NSCS
NaSARRI
Research: NaSARRI Sunflower

NaCCRI Soybean
COREC Oil palm
UNBS
Financial
Institutions
Seed Companies
NAADs
NaCRRI
Oil Palm Farmers
District LGs
Other activities
Oilseed Farmers
Quality Control: NSCS National Seed Certification Service

UNBS Uganda National Bureau of Standards
PFSs
Millers
Oilseed Farmers
Other: LGs District Local Governments

PFS Pay-for-Service Providers
OSSUP Oilseed Sub-sector of Uganda Platform

Appendix 5: Project Organization Chart
PSC

Uganda PDF

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Document of

The International Fund for Agricultural Development

PROJECT DESIGN REPORT

VOLUME 1 MAIN REPORT AND APPENDICES

Eastern and Southern Africa Division

IFAD Web Draft Post-Negotiations

PROJECT DESIGN DOCUMENT

IFAD Project Design Team

VODP Project Coordinator

Uganda: Vegetable Oil Development Project, Phase 2

II. STRATEGIC CONTEXT

III. POVERTY AND SOCIAL CAPITAL

IV. LESSONS LEARNED

VI. IMPLEMENTATION ARRANGEMENTS

VII. PROJECT BENEFITS, COSTS AND FINANCING

VIII. PROJECT RISKS AND SUSTAINABILITY

Area Targets for Oil Palm Development

Uganda: Vegetable Oil Development Project, Phase 2

Main Report Appendices

List of Persons Met

Working Papers (Volume 2)

National Policy and Institutional Framework

Uganda: Vegetable Oil Development Project, Phase 2

ABBREVIATIONS AND ACRONYMS

Annual Work Plan and Budget

Uganda: Vegetable Oil Development Project, Phase 2

Uganda: Vegetable Oil Development Project, Phase 2

Uganda: Vegetable Oil Development Project, Phase 2

Uganda: Vegetable Oil Development Project, Phase 2

Uganda: Vegetable Oil Development Project, Phase 2

Project Objectives. The overall goal is to contribute to sustainable poverty reduction in

Oil Palm Development to benefit about 3 000 smallholder households:

Consolidation and expansion of oil palm in Kalangala District: through

Oil Palm development on Buvuma Island through the replication of the

Identification of new areas for oil palm development.

Oilseeds Development: Continued up-scaling of Lira to a modern agro-industrial

Extension support for about 5 900 farmer groups through annual

Uganda: Vegetable Oil Development Project, Phase 2

Uganda: Vegetable Oil Development Project, Phase 2

Uganda: Vegetable Oil Development Project, Phase 2

Uganda: Vegetable Oil Development Project, Phase 2

maintain an open economy to promote competitiveness, encourage private

reduce population growth to accelerate demographic transition;

improve economic infrastructure to reduce the cost of doing business;

transform agriculture to raise farm productivity;

raise the quality of human capital to increase economic growth; and

mobilise domestic resources to increase fiscal autonomy.

Uganda: Vegetable Oil Development Project, Phase 2

C. IFAD Country Programme

improving land and labour productivity through agricultural technologies. This

support for the decentralisation process to strengthen local levels of government

building rural financial services to encourage small-scale farmers to save part of

Uganda: Vegetable Oil Development Project, Phase 2

Uganda: Vegetable Oil Development Project, Phase 2

Oil Palm. The IE draws a number of lessons:

The explicit introduction of environmental risk mitigation measures and regular

Traditional Oilseeds. The lessons from this sub-component are:

Working through local governments in the early period of implementation (prior to

Uganda: Vegetable Oil Development Project, Phase 2

Time for partnerships. Considerable time, resources, flexibility, patience and

Mainstreaming environment: The same sort of attention which has been

Uganda: Vegetable Oil Development Project, Phase 2