Starting a green grocer business for Uganda? Go on, save a life.

 Starting a green grocer business for Uganda? Go on, save a life.

First the basics:

A green grocer is primarily a retailer who sells fruits and vegetables. For the purposes of Uganda, I will take the liberty to extend this definition to someone who grows fruits and vegetables for subsequent sale.

Still interested?

I don’t think you can successfully start this business if you are not passionate about healthy living because It seems no one likes eating healthy! I remember as a child my mum slapped us when we didn’t eat greens. Bless her, she had to be cruel to be kind, she knew what every good mother knows; greens save your life. For example eating a minimum of 400g of fruit and vegetables a day lowers the risk of serious health problems, such as heart disease, stroke, some types of cancer, type 2 diabetes and obesity.

So then, how do you translate the passion to save a life into a viable business?

THE CONS

1. Low demand (local)

Uganda is a mainly subsistence economy and a lot of families grow their own fruits and vegetables and therefore 80% of Ugandans will probably not be your clients. This leaves a small urban base which is slowly shifting from buying from street side/market stalls to the various emerging supermarkets. On this basis, should you choose to venture into this sector, I suggest that your focus is to supply supermarkets or for export.

2. Excellent organisation skills

As fruits and vegetables have a short shelf life, typically a few days for say bananas and mangos to 1-2 months for lemons and oranges, this sector requires excellent planning/organisation skills. You need:

  1. Cash – to purchase and transport items at short notice .You need advance cash to purchase fertiliser, pay for labour et al as it could be at least 5 months (during growth) before you realise any income at harvest.
  2. Record keeping. In addition to financial records, you need production and quality assurance records.

THE PROS

1. Out grower partnership

Having considered the various options, I believe the best is as an out-grower to an established export farm. This gives two advantages; assured market and technical support.

To supply say Tesco supermarket in the UK or to the European Union (EU) you need quality control systems in place for traceability of your products from the farm to the market as well as for sample quality checks to meet EU health and safety requirements. This makes export very expensive for a small farmer and thus need for the affiliation.

In Uganda, export companies like Farm Fresh Produce and Jaksons Uganda Limited would be a good start. James Kanyije of Farm Fresh produce highlights as follows in a January 2012 article in the New Vision:

I have at least seven dedicated buyers in the UK, but most times I am unable to fulfil the orders. Even with 500 out growers getting the required quantities is still a struggle,”

Now there is a golden opportunity – become an “out grower” of farm fresh and voilà, success!

2. Technical support

In addition to support from programmes like NAADs or for the out grower by the “lead” farm, specific technical support for the sector is available from the EU PIP programme: www.coleacp.org/pip.  The PIP programme provides support in the form of cost sharing to cover cost of technical assistance and training while the investor provides the infrastructure and the working capital.

3. Excellent Profit and Return on capital

On the basis of a financial model we have developed (at inachee.com); I estimate the following:

  • Start-up Capital (A): Shs.13,538,374
  • Profit per year (B): Shs. 52,488,422
  • Return on Investment/Capital (years to get capital back) (A/B): 0.26 years

In other words, you can expect to get back your start-up capital in about 3 months!

The model is based on:

a)     Being an out grower to a farm that exports say chillies;

b)    Inter-cropping. You inter crop the main export crop with other fruits and vegetables and thus earn other income

c)     Irrigation. Weather trends are increasingly unpredictable even in Uganda. Irrigation equipment used to start at $4,500 but products like the “money maker” wonder pump costs $150.

 

About the writer:

Dickson E Wasake (ACCA) is a principal at Inachee.com- a thought leadership firm. For over 8 years he has worked with clients in Uganda, The Bahamas and the United Kingdom providing audit, tax, accounting and advisory services. His experience with various sectors including agriculture enables him have good understanding of this sector.

 

FINAL WORD

Not eating chillies/hot pepper is not necessarily what my mother spanked us for but growing other vegetables and fruits on your farm will save a life, it may well be your own or of your children so go on, plant fruits and vegetables; save a life.

The full article including the detailed model/analysis on this sector can be found at:

http://www.inachee.com/the-sector-analysis.php

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