Beruflich Dokumente
Kultur Dokumente
REPUBLIC OF UGANDA
VEGETABLE OIL DEVELOPMENT PROJECT, PHASE 2
(VODP2)
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).
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
TABLE OF CONTENTS
CURRENCY EQUIVALENTS
ABBREVIATIONS AND ACRONYMS
MAPS
EXECUTIVE SUMMARY
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I. INTRODUCTION
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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
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List of Tables
Table
Table
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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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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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Seed production will provide support to NaSARRI and NaCCRI for breeding
of improved varieties/hybrids with industry demanded characteristics.
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
the foreseeable future.
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
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:
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
resources including soil and water will be sustainably used and managed.
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
context of increasing market integration.
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
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.
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;
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.
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;
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.
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.
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.
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).
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
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.
10
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:
11
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.
12
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.
13
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
Seed production
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
14
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.
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
15
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.
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.
16
17
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.
18
19
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:
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.
20
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.
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.
21
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.
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
22
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
23
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;
24
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;
75.
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;
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;
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.
25
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;
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
26
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:
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.
27
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
Smallholder Area planted
Cumulative area
Area planted
Nucleus
Cumulative area
Estate
Smallholder Area planted
Cumulative area
Area planted
Nucleus
Cumulative area
Estate
Smallholder Area planted
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
Year 2 Farmer Groups
400 1200
900
900
1200
900
900
0
Year 3 Farmer Groups
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
28
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 Impact, providing insight into the higher level indicators of the Results
Framework, will be evaluated through specific impact studies. These will be
29
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.
30
31
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%.
32
(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:
33
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
11.65
2.63
Local Shopping
3.86
Direct Purchase
25.49
Force Account
0.74
Financial Intermediaries
1.55
Other
1.40
Total
52.00
34
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
35
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.
Possible Consequences
Oil palm component could not be
implemented as planned.
Oilseed growers will remain
isolated from markets and without
access to necessary inputs.
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.
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.
36
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.
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.
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.
37
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
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)
PROJECT DESIGN DOCUMENT
MAIN REPORT
APPENDICES
REPUBLIC OF UGANDA
VEGETABLE OIL DEVELOPMENT PROJECT- PHASE 2 (VODP2)
PROJECT DESIGN DOCUMENT
MAIN REPORT
APPENDIX 1
LIST OF PERSONS MET
NAME/ORGANISATION
TITLE
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
Seed Companies
Patrick Soitta
Eva Luwerekera
Eva Juliet Kabejja
Financial Institutions
Fabian Kasi (FCCA)
Robwert Bwire
Abdul Kyanika Nsibambi
Ben Eyabu
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
Member
Acting Head
Managing Director
Management Services
Director
USAID
Gaudensia Kenyangi
Brian Conklin
Programme Officer
AGRA
Fred Muhhuku
Programme Officer
Senior Advisor
Minister of State
Member of Parliament
Hon. Nvumetta Ruth Kavuma
Kalangala District
Executive Director
Executive Director
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
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
BUKALU SUB-COUNTY
Alex Burundo
Hajji Mauso Muhamad
Sisimukha Traders Group
Chairperson LC III
Chairperson LC I
Leaders and members (19 in total)
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
Leaders and members (16 in total)
Leaders and members (19 in total)
LIRA DISTRICT
Patrick Ayena
Hellen Alip
Cecilia Agang
Peter Ajungo
Emmanuel Ageta
Frederick Doi
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
REPUBLIC OF UGANDA
VEGETABLE OIL DEVELOPMENT PROJECT- PHASE 2 (VODP2)
PROJECT DESIGN DOCUMENT
MAIN REPORT
APPENDIX 2
REPUBLIC OF UGANDA
VEGETABLE OIL DEVELOPMENT PROJECT- PHASE 2 (VODP2)
APPENDIX 2
PROJECT LIFE FILE
Quality Enhancement
14
31
31
24
19
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
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
Legal Agreements:
(a)
(b)
(c)
Work
Work
Work
Work
Work
Work
Plan
Plan
Plan
Plan
Plan
Plan
and
and
and
and
and
and
Budget
Budget
Budget
Budget
Budget
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July
July
July
July
July
1998/June
2004/June
2005/June
2006/June
2007/June
2008/June
1999,
2005,
2006,
2007,
2008,
2009,
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
the
the
the
the
the
the
the
the
the
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
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:
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
VEGETABLE OIL DEVELOPMENT PROJECT- PHASE 2 (VODP2)
PROJECT DESIGN DOCUMENT
MAIN REPORT
APPENDIX 3
REPUBLIC OF UGANDA
VEGETABLE OIL DEVELOPMENT PROJECT (VODP)
APPENDIX 3
ACHIEVEMENTS AND LESSONS LEARNED
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.
Improve the health of the population through increased vegetable oil intake;
Export Diversification.
Specific Objectives
5.
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.
i)
ii)
iii)
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.
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).
Plant introductions.
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.
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
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.
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.
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
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.
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.
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.
Low soil fertility, especially in the low land districts in Eastern Uganda.
because of the
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
KEY FILES
CONTENT
Table 1:
Table 2:
Table 3:
Table 4:
Table 5:
KEY FILE TABLE 1: RURAL POVERTY AND VEGETABLE OIL SUB-SECTOR ISSUES
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
Perception of
project
Institutions
Farmers
KOPGT
KOPGA
Priority level
GOU/
IFAD
Potential
Program
Impact
High
High
High
High
High
High
High
High
High
Outgrowers
Smallholders
Nucleus
estate
Land
availability
Actions needed
KEY FILE TABLE 1: RURAL POVERTY AND VEGETABLE OIL SUB-SECTOR ISSUES
Priority Area
Affected
groups
Issues
Actions proposed
Priority
Level
GOU IFAD
Potential
Program
Impact
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
High
NARO/
NaSARRI,
NaCRRI
All chain
actors
Seed
varieties and
supply
KEY FILE TABLE 1: RURAL POVERTY AND VEGETABLE OIL SUB-SECTOR ISSUES
OTHER OILSEED CROPS
Priority Area
Affected
groups
Issues
Actions proposed
Priority
Level
GOU IFAD
High
Medium
Potential
Program
Impact
KEY FILE TABLE 1: RURAL POVERTY AND VEGETABLE OIL SUB-SECTOR ISSUES
OTHER OILSEED CROPS
Priority Area
Affected
groups
Medium-scale Millers
processing
Millers
Low-income
consumers
Actions proposed
Priority
Level
GOU IFAD
Potential
Program
Impact
High
Medium
High
Medium
Quality
assurance
and
standards
Issues
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
National
Agricultural
Research
Organization
(NARO)
and its research
institutes:
NaSARRI
NaCCRI
COREC (oil
palm)
Ugandan
National Bureau
of Standards
(UNBS under
MTTI)
Threats
Observations
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
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
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
Local Government is
making good effort to
help small-scale
farmers with their
production and
marketing
Vegetable Oil
Development
Council (VODC)
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
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
Opportunities
Threats
Observations
Need to form
national millers
association
Major donor-partner
in the sub-sector
Important player in
the OSSUP
Input supplier
network coverage in
VODP2 hubs to be
mapped in
collaboration with
UNADA
Increased effectiveness
through modest financial and
organizational support (by
VODP2)
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
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
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
Donor/Agency
Ongoing
Strong
UNADA
Ongoing
Possible
USTA/ Country-wide
Ongoing
Possible
DFAs/ Country-wide
Ongoing
Possible
Ongoing
Weak
Accomplished
Possible
Kalangala District
Ongoing
Good
Starting
Strong
OSSUP
Country-wide
Ongoing
Ongoing
Strong
Possible
National
Closed
Strong
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)
DANIDA
Iceland Development
Assistance
Multi-donor: World
Bank, USAID and
others
SNV
USAID
UNDP
World Bank
World Vision
Status
1. Ongoing
2. Unclear
3. Started
Development
Cooperation Ireland
(DCI)
FAO
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
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
KEY FILE TABLE 4: TARGET GROUP TYPOLOGY, PRIORITY NEEDS AND PROJECT RESPONSE
11
KEY FILE TABLE 4: TARGET GROUP TYPOLOGY, PRIORITY NEEDS AND PROJECT RESPONSE
12
Input
distributors
and dealers
(incl. seeds)
Millers
Small (< 10
tonnes/day)
&
Medium (< 50
tonnes/day)
KEY FILE TABLE 4: TARGET GROUP TYPOLOGY, PRIORITY NEEDS AND PROJECT RESPONSE
Typology
Large (> 50
tonnes/day)
Traders
13
Research
institutes
(Seed breeding
and planting
material
provision)
Transporters
OIL PALM
Stakeholders
Bidco Uganda
Limited (BUL)
Public sector
Role in Oilseeds Sub-Sector
Challenges
Future Role
Formed: 2004
14
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
Vegetable Oil
Development
Council (VODC)
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
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
Description
OTHER OILSEEDS
MAAIF Seed
Certification
Service
Hosted: MAAIF
Status: Government agency embedded
in MAAIF
Hosted: MAAIF
Status: Government agency embedded
in MAAIF
NaCRRI (NARO)
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
Continued support
to UNBS to develop
and strengthen
quality management
system.
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).
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
Northern
Uganda Oil
Millers
Association
(NUOMA)
Ugandan
Oilseed
Producers and
Processors
Association
(UOSPPA)
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.
Functions:
Extension service.
Potential service
provider under
contracts
Potential service
provider under
contracts
Interests:
Donor-dependency.
Potential service
provider under
contracts
Potential service
provider under
contracts
Uganda
National
Farmers
Federation
(UNFFE)
Membership Organisations
Role in Oilseeds Sub-Sector
Uganda
National AgroInput Dealers
Association
(UNADA)
Description
Formed: 2003
18
Main activities:
Potential service
provider under
contracts
Formed: 1999
Challenges
Donor-dependency.
Stakeholders
organisational capacity.
REPUBLIC OF UGANDA
VEGETABLE OIL DEVELOPMENT PROJECT- PHASE 2 (VODP2)
PROJECT DESIGN DOCUMENT
MAIN REPORT
APPENDIX 5
LOGICAL FRAMEWORK, IMPLEMENTATION MATRIX
AND ORGANIZATION CHART
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.
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
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 Financing is
available
Audit reports
PCO financial reports
VODP2 project progress and M&E
reports
Output
Consolidation and
Expansion Kalangala
Oilseeds
Development
Seed Production
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
Activities
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
UNBS
Financial
Institutions
Seed Companies
NAADs
NaCRRI
District LGs
Other activities
Oilseed Farmers
PFSs
Millers
Oilseed Farmers
PSC