Linking to the Cotton Market

Three business owners in Paicho, a sub-region of Gulu, Uganda, lead Village Enterprise team members through thick grasses, along long, winding, dirt paths, to a large field where small, light green plants have recently appeared from beneath the soil. In three months, these small cotton plants will be large and tall, ready to be harvested. 

During the first half of 2019, Village Enterprise linked 274 business groups to the cotton value chain. This pilot focused on the Northern Uganda region (both due to the availability of worthy private sector actors, proximity to innovations leads, and potential of success and impact due to the prevalence of fertile land and business owners with agricultural experience). The pilot was implemented in all three districts of Northern Uganda operations (Paicho, Nwoya, and Kitgum) and the implementation varied slightly depending on the district. 

At first, some communities were hesitant to grow cotton. Village Enterprise has also never encouraged cotton production because the seeds take a long time to mature, which meant business owners were only harvesting once per year; growing cotton was a bad business practice and wasn’t profitable. But due to improved seeds, the cotton can be harvested after only four months. We decided to use cotton production for our market linkages pilot in northern Uganda. 

What’s the history of cotton in Uganda?

Under colonialism, the British colonial government split Uganda into several regions of agricultural production. Each region focused on producing a specific cash crop: sugar and tea were grown in the central region, the Eastern Region produced sugar, the West produced tea, and the Northern Regions produced cotton and tobacco. After independence, the production of these crops for export prevailed in their given regions, and for many years they were regulated by marketing boards at the national level. During the era of structural adjustment (1980’s) the marketing boards were dismantled as the agriculture market was privatized. However, the cotton value chain remains highly regulated by the Ugandan government. The cotton industry (everything from farming to ginning to exporting) is overseen by the Cotton Development Organization (CDO), which falls under the Ministry of Agriculture. CDO is the only organization allowed to train cotton farmers (or issue certifications or approvals to train) and also approves designated areas for organic cotton production. CDO has formed a very close relationship with our private sector partner, Gulu Agricultural Development Company, and has approved them to train and certify organic cotton farmers in Nwoya and Gulu districts. However, Kitgum remains approved for conventional cotton only.

The Innovations Team spent a few months researching and vetting potential private sector actors to engage in our market linkage pilot. We decided to work with Gulu Agricultural Development Company and the Cotton Development Organization (GADC/CDO). GADC has demonstrated experience and reach. They are extremely well respected in both the agriculture and development sectors within Uganda. They have 10+ years of experience in engaging small-holder farmers and are the leading producers of cotton and organic sesame for export. They also have an outstanding field network system; GADC staff is among the best partner teams we’ve ever encountered. They have an extensive presence in the community —  from their office staff to their field team. And the most important component is their dedication to improving the lives of farmers. 

So how does it work?

 GADC provides training, business owners use their grant money from Village Enterprise to purchase improved seeds, the plants grow and mature, and then GADC buys the cotton directly from the business owners. GADC checks-in with our business owners to ensure that their crops are growing well and provides and assistance that may be necessary. It’s a completely community-based operation because GADC has field teams based in the villages where our business owners are located. Village Enterprise business owners are aware of GADC and know exactly where their cotton will be taken once it’s been harvested. There is no middle-man scamming them or using faulty scales. GADC also takes care of all transportation costs, which eliminates another typical burden farmers face. GADC also offers our business owners the option to take out a loan from them to hire ox and plows, which allows for more productive farming.  

GADC is also a completely sustainable business. Once our farmers have sold their cotton, the crop is taken to a factory in Gulu where the cotton is separated from the seeds. The seeds are milled and turned into soap, animal feeds, and fertilizers. There is no waste in this operation. 

At this point in the pilot, it is clear that this project is providing business owners with a sense of comfort because they know there is a guaranteed market for their crop. The elimination of this worry encourages them to care for their crops and it also provides time for them to invest their energy into starting other businesses on the side for additional income. Because they know their cotton will be sold, they can take a chance and diversify. 

We will have an update for this project in a few months once our business owners have harvested their cotton. 

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