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

OIL: WE NEED TO GET OUR ACT TOGETHER… YESTERDAY

(Published February, 2017) We are on the cusp of an important period in the history of this country and whether we can derive maximum advantage from this will depend on our capacity to put aside petty rivalries and come together as the business community. Over the next three years at least $20b or almost the size of the entire economy will be spent in readying us for first oil. This money will be spent on building infrastructure in the oil bearing areas of western Uganda, on our side of the oil pipeline to the Tanzanian port of Tanga, on the oil refinery and any number of things that will be needed to support oil production. About $3b (sh11trillion) was spent during the exploration phase of which less than three in every ten shillings   or about sh3trillion went to local contractors and suppliers. But this happened over eight years. This despite our local disorganisation and ignorance of the industry and its dynamics. However we should not be content with t...
Post a Comment
Read more

WE NEED A BETTER SOLUTION FOR KAMPALA TRAFFIC

I am sure I am not the only one feeling it. Kampala’s traffic is becoming increasingly unbearable. Even the removal of roundabouts around the city seem to have an opposite effect to the intended purpose of easing traffic flow in the city. Kampala Capital City Authority (KCCA) has an ambitious plan of flyovers, underground tunnels and railway transport, which should help the cause, I hope. The snarl ups that we are coming fast accustomed to, are not only an issue of teeth grinding inconvenience but have a real cost on our economy by hampering and increasing the cost of doing business. A recent World Bank report suggests that as an economy, we are losing about sh3trillion annually due to traffic jams. The losses come in form of delayed deliveries, higher fuel consumption and the health consequences of seating in a smoke filled environment. To put this in perspective this is the combined budget of the health, agriculture and ICT ministries in this year’s budget. Or ...
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

LOCAL CONTENT IS NOT A DONE DEAL, WE NEED TO DO MORE

This year’s “Oil & Gas Convention & Regional Logistics Expo2017” has just concluded after three days of discussion, exploration and soul searching. First oil in Uganda is expected by 2020 and this Expo among other efforts are targeted at getting our local businessmen ready to take advantage of this historical development. At the risk of sounding like a broken record, the discovery and eventual exploitation of our oil resource is one of those once in a generation events, that can transform this nation, not only on a macro level but also in our individual lives. For starters at least $20b will be spent over the next three years in infrastructure development and other things that will ensure we are ready to pipe and refine our oil. During the exploration phase about $3b was spent by the international oil companies, with on three in every ten dollars being retained here. That was an exploration phase and one hopes that we have learnt enough from that period to ...
Post a Comment
Read more

THE GOOD THAT CAN COME OF THE NEW UGANDA AIRLINES

I have fond memories of the Old Uganda Airlines. As a secondary school child, I took advantage of ticket concessions (my mother worked for Uganda Airlines) to fly to the UK to buy clothes and other goods for sale to my friends at school. These trips were a great adventure and served as a good foundation for the businessman I am today. It has been reported that the first two planes of the revived Uganda Airlines will be landing in the country within the month. The finance ministry has been presenting to parliament their needs to pay off deposits on the first two of six planes they are to take possession of in coming months. The project has its equal share of supporters and critics. I am a qualified supporter of the project. In business nothing is certain. We deal in probabilities. When getting into a venture we often must weigh the risks versus the returns of a project. If the risk of failure outweighs the potential profit we stay away, otherwise you are gambling...
Post a Comment
Read more

A SHIFT AWAY FROM AGRICULTURE IS CRITICAL FOR UGANDA

Anyone who has half a stake in this country would be a keen observer of the economy and the direction it is taking. In the last three decades the economy has shown strong growth, only slowing to overcome bad weather, a global financial crisis or unrest in the region. Compared to when I started out in business, it has become a more liberal economy, with individual initiative being rewarded more and more. While the economy is still dominated by the informal sector, the formal sector is growing annually. But the biggest shift in the economy has to be the reduction in agriculture’s share of the economy from more than 80 percent to about 25 percent today. This has happened despite the leap in the production of everything from bananas to coffee or from milk to maize. What has happened is that more of the economy – though not nearly enough, has been taken up by industry, construction and services. This is how it should be and in fact, more work is needed in shifting t...
Post a Comment
Read more

WE NEED FASTER TURN AROUND ON OUR ROAD PROJECTS

During a recent trip to China I was shocked to find properly paved roads and first class infrastructure deep in the countryside, hundreds of kilometres away from the capital, Beijing. I rode the high-speed railway out of Beijing, doing more than 300 kilometres per hour and I can attest I have never been on anything like it anywhere in the world. Not in Europe. Not in the States. Nowhere. I was blown away and wondered why we can’t at least do a tenth of this at home. I have to say I was pleasantly surprised when I used the Entebbe Expressway from the airport. I was in Kampala in under an hour. The Entebbe road had become a nightmare. I was shaken out of my good feeling when I had to make a trip to Tororo the other day. On my way back I spent two and half hours between Mukono and Kampala, about the same time it took me from Tororo up to Mukono. Clearly there is a lot of work to be done on our transport infrastructure. The full extent we probably don’t appreciate,...
Post a Comment
Read more