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.

Industry insight: finding a better way to deal with factory trim
Carcase trim in meat factories is under the spotlight but how big a problem is it and what can be done to improve it?

The report of €200 penalties being handed out 21 times so far this year has generated huge debate among farmers. Just as it is important to highlight that these penalties have been applied, it is equally important to keep the issue in context and suggest how the issue of carcase trim scrutiny could be delivered in a way that would maximise farmer confidence that the system was delivering them full value for their livestock.

Context

It is worth looking at the numbers again. In the calendar year 2017, there were almost 1.8m cattle graded in Irish meat plants and department inspectors made 662 visits to factories across the country, checking 59,227 cattle in the process. While 21 major non-compliances have been found so far this year, there were actually none in 2017. There is no data available yet on the number of visits carried out in 2018 nor the number of cattle checked. However, assuming that it will be broadly similar to last year, then putting 21 cattle in the context of over 59,000 inspections means that less than half of 1% received the penalty.

The problem is that farmers don’t know what 21 cattle are being referred to and no doubt every farmer who has killed cattle this year, and has been disappointed with how they weighed, will be wondering was his among them. This is where full transparency would benefit both factories and farmers

The farmer whose animal was dressed so poorly that it merited a €200 penalty surely has a right to know what happened. We can be sure that Department inspectors will only take this course of action in the most extreme cases and in fact in both 2015 and 2017 there were no €200 penalties issued at all, with 28 given out in 2016. There are likely to have been several warnings issued along the way for more minor non-compliances.

In Northern Ireland, for example, there is no financial penalty but a system of warnings, both verbal and written, which is used sparingly. The ultimate sanction is an inspector stopping the line if he finds shoddy dressing of carcases during the visit. Another feature of the inspection process in the North is the publication of every factory’s performance on a bi-monthly basis. Unfortunately, the factory identity isn’t revealed, with each represented by a letter – A, B, C etc. What is interesting to note is that there is a variation between factories and the general rule of thumb is that a 90% satisfaction rate with dressing is typical. This means that one animal in 10 is dressed in a less than perfect way, ranging from minor to major non-compliance.

Better solution

In terms of delivering maximum transparency and building confidence in the process, it seems that a hybrid model using the best of both Northern Ireland and Republic of Ireland systems would be the way to go. In fact, if individual factory results were published with the factory identified on a regular basis, farmers would quickly see which factories were performing best. Factories too could watch each other and if a factory manager had a couple of bad reports in a row, you could be almost guaranteed that improvement would follow for the next time. There is nothing like peer pressure to drive performance.

It should also be recognised that after five years campaigning in the beef forum, additional monitoring of trim on an ongoing basis and in addition to the unannounced department inspection, will be rolled out in the new year. This will be carried out by DAFM veterinary public health staff AOs as they are commonly known and no doubt will enhance the scrutiny provided on carcase dressing.

Camera solution

Using modern technology, it should be possible to have every carcase recorded in sufficient detail that would enable a review by all parties after the event if there was any doubt in the standard of trim. The industry isn’t at that point yet though a trial on camera upgrade has been running for some time.

Much is said about the difficulty in developing technology that will operate satisfactorily in a meat factory environment. It is also a reality that Government meat hygiene inspectors can trim carcases as they move past their point on the line which would distort the final picture. However, a proper camera monitoring system would pick up issues such as hide puller damage and contribute to further enhance carcase trim monitoring.

Comment

Making sure the correct standard of carcase dressing is applied is a challenge. Enhanced technology plus additional supervision will all contribute to improve the standard. However, the ultimate control is robust inspection with the results published for non-compliances, and publication of these will drive improvement.

Bayer to cut 12,000 jobs and exit animal health business
Some 12,000 jobs are to go at Bayer and it will exit the animal health business as it aims to sustainably enhance its performance and profitability.

Bayer will reduce its workforce worldwide by 12,000 jobs by the end of 2021 in a bid to enhance its performance and profitability.

Bayer employs 118,200 people worldwide, with a significant number of jobs to go in Germany.

Jobs in its pharmaceuticals section, approximately 900 jobs in R&D and around 4,100 positions in its crop science division will go as the result of integrating Monsanto. A further 5,500 to 6,000 jobs in will go in the corporate functions sector.

Meanwhile, the company also announced that it intends to exit the animal health business and is assessing available options.

Bayer said that although this business offers growth options in an attractive market, it intends to allocate the investment resources necessary to support animal health to its core businesses of pharmaceuticals, consumer health and crop science.

Changes

These changes are two of a number of changes Bayer plans to make in the coming years.

Werner Baumann, chair of the board of management of Bayer AG, said that these changes are necessary and lay the foundation for Bayer to enhance its performance and agility.

“With these measures, we aim to take full advantage of the growth potential for our businesses. We are aware of the gravity of these decisions for our employees. As in the past, we will implement the planned measures in a fair and responsible way,” he said.

Shares

Assuming a constant portfolio and stable exchange rates, the company expects core earnings per share of €6.80 in 2019 (2018: €5.70 to €5.90), with a target of around €10 in 2022.

The group EBITDA margin before special items is targeted to increase to over 30% in the period through 2022, it said.

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Oil prices fall below $60/barrel
Faced with a supply glut of oil, prices for Brent crude oil have plunged to their lowest point in over a year.

Oil prices fell below $60/barrel in the last week amid mounting market concerns that the world is facing into a supply glut of crude oil.

Brent crude oil prices have slumped almost 30% since October and are at their weakest level in over a year.

Volatility

Further volatility in oil markets appears likely ahead of a meeting of the OPEC oil cartel in early December to decide on whether to curb production and push prices up.