Watch: farmers connect with markets in Kenya and Uganda
While the past year's drought in East Africa and tense elections in Kenya grab the headlines, the region's farmers are quietly gaining greater access to markets and generating cash incomes.

Imagine farming with no Irish Farmers Journal to give you the latest prices and weather forecasts, no marts or co-ops to sell to, and no local hauliers at the end of the phone.

This is everyday life for farmers in northern Uganda – yet they are finding innovative ways of overcoming those constraints and getting more cash out of their land.

Standing in a newly planted field of ground nuts and banana trees near Abim town, Andrew Omara is one of them.

Last year, he sold his small farm a few miles away to start a bigger one here. He has cleared 10ac of bush and has another 30ac left to open.

A crucial step in the process was the €2,400 loan he secured to cover nearly half of the land purchase. At 20%, he considers he got a good interest rate.

This was thanks to the detailed farm records he was able to produce through FIT Uganda, a firm providing remote accounting and information services to farmers through mobile phones and a network of local agents, most of them farmers themselves.

“We send 56,000 messages every Tuesday, Wednesday and Friday with price data, weather information by region and financial or extension tips,” said Robert Kintu, chief executive of FIT Uganda.

The farmers pay for the service, and more than 20,000 of them do their accounting through the firm. The most popular feature is a prediction of the rainy season’s start date several weeks in advance, which allows farmers to plan crop planting.

Andrew and his neighbours are also making strides as a group. They bulk their crops together and advertise on local radio to attract more affluent buyers. They also test new seeds, with a drought-resistant variety of sunflower being trialled on a nearby farm.

Not far from Andrew’s farm, Grace Okengo’s holding looks very different. After trialling a field of chillies last year, she has now planted more than 5ac of her 7ac farm with the crop. Sunshine Agro Products, a spice processor in the region, provides her with seeds, buys her production and gives her a commission on seeds sold on to other local farmers. “Chilli is better than other crops such as tomato, which failed entirely last year. It is drought-resistant,” said Grace. After paying 10 workers per acre during the two labour-intensive annual harvests, she earns more than €100/ac each year – a significant rise in income for this single mother of five children.

In these cases and others visited by the Irish Farmers Journal, the Irish aid agency Goal established the link between farmers and businesses such as FIT Uganda or Sunshine Agro Products. After decades of armed conflict and refugee crises in this region, stability has returned and Goal’s humanitarian role has changed. “At the moment, we’re working with the private sector to stimulate their activity. It’s not so much about subsidies, but encouraging farmers to access new value chains,” said Goal Uganda’s Charles Wando. “We come in and do a market diagnosis. Then we work with the actors to fill the gaps in the market.”

Cash from avocados

Another example is TruTrade, a Ugandan and Kenyan company majority-owned by the Irish charity Gorta Self-Help Africa. The firm provides a trading service for farmers and merchants, with a twist: it pays a higher commission to those brokers who secure a higher price for farmers.

“Merchants coming to farmers buy products speculatively,” said Will Galvin of TruTrade. They drive to villages in trucks and offer the lowest price possible in the hope of making a profit on their way back to the cities on a day-to-day basis. “The problem is credit. The banking network is lacking and you can’t get a trading loan,” said Galvin.

TruTrade’s mobile phone-based service lets merchants enter the volume and price agreed with a farmer. TruTrade staff check that the transaction meets a minimum price and pays the farmer directly through their phone – as common as cash in the region, and easier to control for farming women who often see their income captured by their husbands. The corresponding amount is loaned to the merchant, who must repay it after selling on the products.

Listen to participants in the avocado trade in our podcast below:

Avocado growers in Kenya’s Muranga county have been using the system to sell their fruit to FairTrade Enterprises, which exports it to the Netherlands under the premium organic and fair trade labels. Farmers in the town of Getige said they now secure over 7c per avocado, instead of 2c from roaming merchants, and get paid within days instead of weeks. They can hardly keep up with European demand for the fruit. “We know that our production could increase 10-fold and there would still be a market,” said Simon Kinani Kijachi. He has 200 avocado trees as well as other crops and two cows on 4ac of sloping land in a lush river valley. His neighbour John Wanjoki showed the two new houses he built for his family with the growing income from his 2ac farm.

FairTrade Enterprises employs agronomists to train the farmers and increase production, packs and ships the fruit and keeps a 10% margin. “FairTrade is a private company but a social enterprise,” said its co-founder James Weru. “In the future, we want to process and pack avocados in the villages and start oil production.”

Lesson learned: embrace change

The farmers visited in Kenya and Uganda displayed an incredible willingness to change habits established for generations. Once convinced that chilli would improve her income, Grace Okengo converted most of her farm to the crop within two years. Others turned fragile enterprises focused on maize, a commodity most exposed to weather and price volatility, into diversified farms supporting livestock and a variety of crops – again within one or two years. The improvement in their lives and the flexibility they have shown despite limited external support are inspiring.

Specialised nutrition drives sales growth for Danone
Infant formula sales decline slightly in 2018 as Chinese sales fall in the final months of 2018.

French dairy giant Danone reported like for like sales growth of 3% for 2018, as total group revenues reached €24.7bn.

This was driven by strong like for like sales growth of 6% in Danone’s specialised nutrition division, to reach €7.1bn.

Specialised nutrition, which includes Danone’s infant formula business, had operating profits of just under €1.8bn as profit margins in the division widened from 23.8% in 2017 to a lucrative 24.8% in 2018.

Specialised nutrition accounts for less than 30% of Danone’s total sales, but the division brought in almost half of the group’s €3.6bn in operating profits last year.

Danone said its infant formula business recorded a slight decline in sales during 2018.

In China, which accounts for 30% of all the group’s infant formula sales, Danone said it saw sales decline for the final months of 2018.

Danone blamed this decline on falling sales of infant formula via indirect sales channels, such as supermarkets.

However, Danone said it was seeing very strong sales growth in direct channels such as specialised mother and baby stores in China.

Arla to pay all of its €290m in net profits to farmer members
The Danish dairy co-op said it had taken the exceptional decision to pay out all its profits to farmers after the drought in 2018.

Arla, the farmer owned dairy co-op, will pay out all of its net profits from 2018 to its farmer members. The co-op will distribute €290m to its farmers, in the form of a 2.3c payment for every litre of milk supplied to the co-op during 2018.

With 11,200 owners, this will equate to an average once-off payment in the region of €26,000 for each Arla farmer.

Arla said this exceptional payment was in recognition of the difficult weather in 2018, when drought conditions last summer hit farms hard and left many in a difficult financial position.

The co-op is forecasting sales for 2019 to be in the region of €10.2bn to €10.6bn

Arla made the announcement as it reported a 1% increase in full-year sales for 2018 to €10.4bn, which was driven by 3% growth in sales of branded consumer products.

Over 45% of Arla’s business now comes from branded consumer dairy. Profits (EBIT) for the year grew by 6% to €404m.

For 2019, Arla said it plans to invest €458m in capital projects, including a new milk powder facility in Germany, as well as the expansion of several sites in northern Europe. The co-op is forecasting sales for 2019 to be in the region of €10.2bn to €10.6bn.

The co-op recently implemented a cost-cutting programme across the business known as Calcium, which aims to deliver €400m in savings by 2021.

This programme delivered €114m in cost savings during 2018, which was well ahead of the €30m savings target for the year.

First quarter profits fall sharply at Tyson Foods
The largest meat company in the US said profit margins on pork and chicken are tightening.

First quarter profits fell sharply for US meat giant Tyson Foods thanks to low chicken and pork prices.

Tyson, which is the largest meat processor in the US, reported net profits for the first quarter of its 2019 financial year of $551m (€487m), which is down 66% on the same period last year.

Tyson blamed the drop in profits on tighter margins as a result of rising labour costs and higher animal feed costs for chicken and pigs.

Tyson said sales in its beef division fell due to reduced cattle supplies

The company reported sales of $10.2bn (€9bn), which was in line with the same period last year.

Adjusted operating profits for the period fell 11% to $841m (€745m), as profit margins fell from 9.2% last year to 8.3% in the first quarter of its 2019 financial year.

Tyson said sales in its beef division fell due to reduced cattle supplies.

However, profits from its beef division grew by 20% to $305m as a result of higher sales prices for beef and strong export demand.

Profits from Tyson’s chicken and pork divisions were both down 40% on last year to $160m (€142m) and $95m (€84m) respectively.