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KAMPALA – The United Nations World Food Programme (WFP) has leased its 5,000 metric ton capacity warehouse in Gulu town to a private company Afgri-Gulu Ltd, for a groundbreaking venture that will conduct normal grain trade and at the same time operate the warehouse receipt system. The development will empower more than 9,000 smallholder farmer groups.
"WFP is excited about this development," said WFP Country Representative Alice Martin-Daihirou. "By partnering with Afgri-Gulu Ltd, a company which, through its parent company, has substantial experience in marketing grain in Africa -- and has unmatched expertise and financial capacity to buy grain from farmer groups in Uganda -- we will empower thousands of farmer groups and improve their access to markets."
Martin-Daihirou explained that Afgri-Gulu Ltd, a subsidiary of the listed South African company Afgri, will allow farmer groups and traders to decide how they want to trade in their produce - either through normal trading business and therefore get paid immediately, or via the warehouse receipt system.
The warehouse receipt system, established under the Uganda Commodities Exchange is aimed at stimulating the economy and opening up more opportunities for producers. The model not only allows farmers to process, bag and store grain at the furnished licensed premises but at the same time use their produce as collateral to access finance.
A legally tradable electronic receipt, which is a document of title indicating the quantity and quality of stored goods, can be used by the depositor can obtain a bank loan. The keeper guarantees to either hand over the same quality and quantity of goods to whoever buys the "receipt", or give it back to the depositor if requested. This will allow the producer to continue with projects such as preparing land, buying seed and fertilizers, or even meeting personal needs such as paying school fees.
The farmer groups will also benefit from training from the company on good agricultural practices and how to reduce post-harvest losses.
Martin-Daihirou said that while WFP played an important role as a catalyst in rehabilitating the Gulu infrastructure, the agency is confident that Afgri-Gulu Ltd has the capacity to further develop the grain market in Uganda allowing for the market to stimulate growth and provide better returns for the farmers and others involved in the trade.
WFP has been investing in agriculture and market support in Uganda since 2003, aligned with the National Development Plan and the Comprehensive Africa Agriculture Development Programme Compact. WFP's aim is to enable smallholder farmer groups access to markets- including selling to WFP itself - and therefore increasing their incomes and boosting their household food and nutrition security.
WFP has also signed a joint action agreement with the Ministry of Agriculture, Animal Industry and Fisheries and the Ministry of Trade, Industry and Co-operatives to support the development of market systems for agriculture commodities. In line with this agreement, WFP has upgraded eight warehouses in Uganda, including the one in Gulu, and has supported the construction of 33 community grain stores. In addition, WFP is supporting the training of farmer groups in post-harvest management and the establishment of modern household silos in the Teso and Acholi regions.
WFP is the world's largest humanitarian agency fighting hunger worldwide. On average, WFP reaches more than 90 million people with food assistance in 80 countries each year.
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