Skip to main content

SOROTI FRUIT FACTORY, A POTENTIAL GAME CHANGER FOR EASTERN UGANDA


On the weekend President Yoweri Museveni commissioned the Soroti Fruit Factory, which promises to change the fortunes of fruit farmers in the Teso region.

"According to reports, the factory can process 129,000 tons of fruit annually or the equivalent of 3,225 trailer loads of fruit. There are 8.2 million fruit trees in the region, if each tree produces 80kg, the 656,000 tonnes resultant production will be more than sufficient to keep the factory running well into the future. Upgrades of the plant’s capacity is foreseeable very soon....

The factory’s products – packed juices, are to be sold locally and to the region.

The Teso Tropical Fruit Farmers’ Co-operative has complained that they have been receiving sh200 a kg for their produce but have seen a doubling of the price to sh500 a kg by the factory. The cooperative is a 20 percent partner in the enterprise. Government through Uganda Development Corporation (UDC) owns the remainder.

The factory is a $10.2mln investment done by South Korea and Uganda.

This single investment has got the potential to be a game changer in the Teso region and even further afield, if managed well.

The challenge for most farmers and the rural areas in particular is the lack of, quality inputs, knowledge of modern agricultural practices, to not only increase productivity but minimize post-harvest losses and access to markets.

I would like to believe that the promoters of the factory have already helped the farmers plant he appropriate varieties of fruit to supply the factory. Not any kind of orange or mango can produce the juice required to make the venture profitable and sustainable. So while there maybe millions of fruit trees in Teso their fruit may not be of the kind that the factory requires.

I read that 120 trees can be fitted on an acre. Is this the optimal number of trees? Is the spacing correct? With the addition of fertilizer can we get more trees on the land or push productivity higher than current estimates? How about pest control? How do we harvest the fruit and handle it to ensure that we not only minimize postharvest losses but also ensure that the quality delivered to the factory is top notch?

And finally the market. I saw that the initial juice will be sold in 200 ml pouches at sh1,500 each. Immediately I know that the target market will not be the rural areas but may compete favorably on the shelves of Kampala and other urban areas. I imagine with greater economies of scale they may bring down these prices.

Nevertheless, the processing and packaging lengthens the juice’s shelf life, meaning it can be transported much further afield than were it only fresh juice. Assuming a cost of production of sh750, factoring in distribution and marketing it’s hard to see how that juice can cost a dollar – about sh3,800 in any of its target markets.

"It is easy to think that there is an obvious market for juice, but there is a lot of competition from local, regional and international companies. The company’s marketing department will need to be very sharp to make inroads in the market. Just because the juice is locally produced is not enough of an incentive for people to take it up....

Building the factory is commendable and government should be lauded for it. But the factory is not the business.

The business may include providing extension services to the farmers, managing supply, production, marketing and distribution. Any part of this value chain can fail the whole enterprise. Which would be a crying shame.

It should not be allowed to fail, if only because it can encourage production in the Teso area, but it must be run on sound commercial principles so that the help it gives the fruit farmers can be sustained well into the future regardless of the circumstances.

And if it succeeds it could serve as useful pilot for other similar enterprises around the country.

We are poor because we have been unable to unlock the vast potential of our assets – the land and our people. Adding value to our produce will bring us one step closer to unlocking our incredible potential as a country.

Good luck Soroti Fruit Factory.







Labels:

Comments

Post a Comment

Popular posts from this blog

HOW TO RECOGNISE A PONZI AND NOT FALL VICTIM

Another Ponzi scheme has come crashing down around the ears of hundreds of “investors”. Unsurprisingly. In its recent reincarnation poor Ugandans were lured into a scheme where they bought computer tablets. This entitled them to a monthly pay off, $100, and a Christmas bonus for their children. In this case the unsuspecting investors -cum -victims were being given a share certificate. Meaning you accept to take the part of the risk in this project. Which was inadvertently reducing their burden of risk and liability for the issuing company. I leave that area to smart lawyers to handle.   As is always the case with these things, it’s not quite clear where the pay-out will come from. A common characteristic of these schemes is that you might get initial payments before you starting missing a few and the stories begin. The promoters of these schemes or scams often use the money from the latest entrants to pay the older “investors” until one of two things happen. Either...
Post a Comment
Read more

BEWARE OF THE CON MAN

I read with a mixture of horror and sympathy for the victims of the latest Ponzi scheme gone bad in town. Last week a company, Global Cryptocurrencies Ltd, collapsed and along with it went billions of shillings, by police estimates, of their clients’ money. The company working out of an obscure office on Namirembe road, managed to rope in all manner of clients with the promise of magical returns – 40% a week! I have been in business for most of my life, if I could be guaranteed 40% week I would sell everything I own and jump in with both feet. Or maybe not. And this is why. They say if anything is too good to be true, it is. If you can get an annual return of 40% on your investment you will be doing extremely well. So if you put in a million shillings in your business and walk away at the end of the year with sh400,000 after taxes you have found a good thing, and I would like to be your friend. I have seen my share of scam artists and con men. Below are my fast an...
Post a Comment
Read more

KEEP UP PRESSURE ON CORRUPTION

There has been a flurry of activity surrounding corruption in recent weeks, with a few public officials caught red handed taking bribes. The public deprived of services because of a few greedy individuals are understandably gleeful.  However they are also those who are a bit sceptical, wondering whether this campaign will last or will peter out along the way. It is heartening to see that President Yoweri Museveni has put his full weight behind the latest attempt and provides a positive signal to all parties concerned. He should be supported by every well-meaning Ugandan so that this drive does not fizzle out in a few weeks. I choose to be optimistic about this anti-corruption drive, because rolling back the endemic that corruption has become, is one of the first steps we need to take towards attaining middle income status as a nation and for any other meaningful development we hope to see in the future. We see it in our daily lives. Beyond the moralit...
Post a Comment
Read more

THE KEYS TO OUR HEALTH ARE WITHIN OUR REACH

I prefer to speak about business. But it is obvious to me as it should be to everybody, that the fruits of business can’t be enjoyed without good health. As we progress in age we need to take care of our health more than before, focus on prevention because our bodies can no longer bounce back from illness as fast as they used to. The other day I happened upon a Facebook video from Dr Luke Coutinho, an Indian doctor who treats cancer patients. He made a wonderful video that moved me -- “Four things people with cancer have in common.” Look it up. Coutinho, in the video said that when he looked at the data from hundreds of patients, from all over the world, that had been treated at his facility he found four commonalities. The first one he said was chronic constipation. He explained that constipation, infrequent bowel movement, means the body is retaining toxins that should not be there. These toxins then find their way back into our bodies and provide the environment fo...
Post a Comment
Read more

OIL IS COMING BUT LET US NOT FORGET OUR GOLD

The country is operating on a time table that first oil will be seen in 2020. There is a lot of frenetic activity around building supporting infrastructure, getting investment approvals, ensuring local participation and any number of other things to ensure readiness the moment the oil starts gushing down the pipeline to the coast. And so we should. I was intrigued the other day to read in the Kenyan press how Kisumu County, just across Lake Victoria from us, has set upon an ambitious project to ensure egg and poultry meat self-sufficiency for the county within the next few years. Under the plan Kisumu County will train 100 farmers every month over the 12 month pilot period. The intended aim is to be able to satisfy the county’s demand for 25,000 broilers and 75,000 eggs daily. Whereas I would prefer that this was private sector driven deal, I like this plan for a number of reasons not least of all that it shows leadership by the county and secondly, it relies o...
Post a Comment
Read more

SPORTS AS AN ANALOGY FOR BUSINESS

Like everybody else I know, my spirit was lifted by the success of our athletes at the World Athletics Championships last week. The diminutive Halima Nakaayi showed the heart of a lion, sprinting over the last 100m of the women’s 800m event to snatch victory from a more favoured American runner. It was so uplifting to watch. Subsequent stories about the challenges she has had to overcome to get where she is now were testament to the determination of the woman. Joshua Cheptegei’s victory, while no less inspiring, had a different quality to it. Cheptegei was the man to watch going into the event. He won previously at the Commonwealth Games last year and the in the just concluded Golden League. He was a silver medalist in the 10,000m at the last World Championships in London, pipped to the tape by the now retired Mo Farah. Cheptgei still had to battle the Kenyans and the Ethiopians all the way. But as a favourite he lived up to expectations, which sometimes is more diffic...
Post a Comment
Read more

FINANCING OUR ENTREPRENEURS, A CHALLENGE WE CANNOT IGNORE

In recent weeks the issues of financing for business has been in the news, in one form or the other. We have seen the challenge a past minister is facing with having to hang onto his home. The case is in court, so we can’t discuss its merits and demerits, just to say he may have fallen prey to some predatory practices, with the lender skirting dangerously on the edge of the law. Across the border in Kenya a cap on bank lending rates has been repealed. Three years ago Kenya’s parliament passed a law restricting lending rates to two percentage points above the rate at which the central bank lent money. In reaction banks pulled back their lending to businesses, depressing the economy and prompting the reversal. So now banks can “properly” price their loans, often to the discomfort of small and medium sized businesses. The two incidents are related and speak to the availability and cost of credit. In my business career I have benefitted immensely from credit. It is next...
Post a Comment
Read more