Presented by Alex Tatwangire at the Workshop on In-depth smallholder pig value chain assessment and preliminary identification of best-bet interventions, Kampala, 9-11 April 2013 pigs, markets, value chains, crp37, Uganda, east Africa, Ifad, ilri, presentations Presented by Alex Tatwangire at the Workshop on In-depth smallholder pig value chain assessment and preliminary identification of best-bet interventions, Kampala, 9-11 April 2013

1. Successes and failures of institutional innovations for improving access
to services, input and output markets for smallholder pig production
systems and value chains in Uganda
Alex Tatwangire (tatwangire@yahoo.co.uk)
Smallholder pig value chains development project, ILRI Kampala Office
“Workshop: In-depth smallholder pig value chain assessment and preliminary
identification of best-bet interventions, Kampala, 9-11 April 2013”

2. Section 1 Section 2 Section 3 Section 4
• Definition of • The nature of • Average revenue • Institutional
innovations and input and output and costs innovations
innovation marketing associated with recommended by
processes. channels in marketing different
Uganda. channels institutions:
• Successes
• Institutional
innovations and • Pig farmers’ • Institutions that • Failures
the functioning of participation in aim at improving • Major constraints
markets. different access to services in the
marketing and markets implementation
channels.
• Way forward for
the SPVD project

3.  Agricultural Research for Development (ARD) in Africa- dominated
by the traditional approach of linear research, extension and
adoption that has failed to improve livelihoods especially those of
the poor.
 The SSA CP introduced an Integrated Agricultural Research for
Development (IAR4D) approach to address the challenges of the
traditional approach of ARD.
 “limited impact of African agricultural research on the intended
beneficiaries”.
 When farmers and other value chain actors are not deriving gainful
exchange in the market, it means that there are no ideal conditions
of market exchange- , implying high transaction that create
opportunistic behaviour in form of cheating and free riding.
 Institutional innovations create good institutions that improve
market exchanges- by minimising transaction costs at reasonable
cost.

4.  Innovation is a new way of achieving the tasks:
 a process that comes up with solution to problems in a new manner
 Encourages the need to experiment and develop market opportunities.
 Changes the way formal Research and Development (R&D) service providers
function in terms of behaviour and roles.
 facilitate efficient and equitable outcomes of economic development
 enhances fair interaction of independent actors along the value chain.
 Innovation can be technological, institutional, or political:
 Technology innovation - about innovating the tools at our disposal- about
what we may use to achieve our goals.
 Process innovation - how we may achieve our goals more efficiently and
more quickly (changing the responsibilities and the perceptions of the people
involved )
 Institutional-about innovating who we are and why we are doing what we
do.

5.  An innovation starts as a concept that is refined and
developed before application- to overcome main
failures and constraints in markets.
 Innovations may be inspired by reality requires:
 Research
 Development (up-scaling, testing)
 Production
 Marketing
 Use
 Innovations respond to need and economic
conditions: farmer cooperatives created in response
to low prices
 The process of innovation requires:
 the need to understand how existing institutions work, and
how individuals react in order to introduce activities and
products that serve peoples’ need and that are sustainable
economically and politically.

6.  Informal institutions
 cooperative behavior sustained through reciprocal exchange
and repeated interaction
 e.g., informal credit markets, village markets, community
initiatives
 Conditions under which these work?
 Small setup costs, but rising costs as the number of
participants and geographical scale increase
 Belief systems
 behavior that is driven by internalized ideas about what is
right
 morals, religion, ideology …
 State institutions
 Cooperation achieved through “third-party enforcement” of
rules and contracts
 Implicit force of state punishment

7.  Institutions are a prerequisites for markets :- minimise transaction
costs, transmit information, mediate transactions, facilitate the transfer
and enforcement of property rights and contracts, and manage the
degree of competition.
 Institutions are the norms, rules, and organizations that “govern”
transactions:-mechanisms for mitigating the collective-action problems
that lie at the heart of economic development.
 Market institutions can be defined as rules of the game, enforcement
mechanisms and organizations that facilitate market
interaction, coordination, contract formation and enforcement
 The poor are dependent on poorly functioning inefficient markets for
the livelihoods.
 Need well functioning markets that support competition, lower the
costs of doing business, and provide incentives for trade and
investment.

8. Issue/Market Failure Intervention
Unequal Access to Information •Public interventions
•Market Development / private participation
(e.g. ICT, credit bureaux etc)
•Collective action and network development
•Excessive Costs and Risks of •Risk reduction
Transactions •Guarantees
•Coordination failures – no access to •Value chain interventions
supply chains /hierarchies •Institutional innovation e.g. Contracting,
•Indivisibility (minimum Collective Action
transactions sizes) •Market facilitation and Development

9.  No public institution, NGOs, or private institution has had
significant interventions to improve marketing of pigs and
pig products along the value chain in in Uganda.
 Few organisations have been engaged with restocking and
formation of farmer groups - include: NAADS, World
Vision, and Child Fund.
 The formation of farmer groups has failed to generate the
anticipated collective action.
 NAADS has not attempted to promote the marketing of
inputs and pig products:- no focus on traders, input
dealers, and processors”
 Other institution Include: the East Africa Diary Development Project
(EADD), Foodnet, VECO, IBI-Trust, the Sub-Saharan Africa Challenge Program
(CIAT-Africa, Agricultural Research Institute Kabanyolo, Africa Highlands
Initiative (AHI), Huntex Industries Company Limited-Kabale, Kabale Local
Government, NARO – KAZARDI, Makerere University, and ICRAF.

10.  Focus is on organizing smallholders into farmer
groups or producers organizations to overcome
market failures and maintain their market
position by:
 acting collectively
 become better positioned to reduce transaction costs for
their market exchanges
 obtain necessary market information
 secure access to new tech-nologies
 tap into high-value markets that allows them to compete
more effectively with large farmers and agribusi-nesses.

11.  Active producer groups or associations- a reliable way of
improving access to output markets, inputs, services and in acquisition
of skills that are vital for improved production and management.
 Formation of farmer groups at village level:- village clusters
represented on District/LG IPs
 Lead farmers appointed by groups : to test, demonstrate or
provide learning sites for alternative technologies
 Producers linked to processing/major companies - so that they
become contract growers.
 Farmer groups sourcing inputs and marketing produce collectively
 University students undertaking research - requested by local
communities and the feedback of results to farmers
 Seed loans by seed companies being repaid in kind with seed
donations also being made to other farmers, pass-on-seed scheme
 Sustainable intensification in smallholder dairy business
though institutional innovative system (in this case, the “dairy hub
marketing”).

12.  New high-yielding crop varieties (cereals, legumes, and
root crops) being selected tested and adopted by
farmers in all Pilot Learning Sites (PLS)
 Double bagging of grain to prevent weevil damage
(from Purdue University)
 R&D converting an indigenous sorghum porridge to a
non alcoholic “Mamera” sorghum juice now sold in
local supermarkets
 Potato washing, grading, packaging using local
materials and marketing in hotels and supermarkets
 Increasing use of organic and inorganic fertilizer and
basins- the development and sale of vegetable boxes by
agro-dealers, contain seed, fertilizer and chemicals
sufficient for 0.1ha with credit being available for their
purchase.

13.  Certain conditions need to be in place, if
incentives for farmers to organize around
marketing are to be created and sustained
 Producer/farmer groups can simplify long
marketing chains by connecting smallholders
directly to markets, bypassing various
marketing intermediaries.

15.  Lack of credit and high cost of credit are major impediments for adoption.
 Limited access to information and sources of technology, higher cost of
inputs.
 Limited or no skills of the various players in the chain- a high learning cost
 Low quality agricultural produce, inadequate supply
 High transaction costs- high market risk and cash flow problems.
 Poorly organized market for crop and livestock products
 Domestic market for local foods, including pork exists, but is disorganized –
many players in the value chain
 Low participation of cooperatives, associations and farmer groups.
 Price variability, low volumes, lack of buyers, and low business skills.
 No standards for marketing products, linked with knowledge &
information
 Disorganized markets that can’t provide a win-win situation for all the
players in the value chain.
 Failure to transform the raw foods into some form of
processed, branded, easier to move and that can fetch better prices.
 Limited ability to transform our products to take advantage of our
infrastructure conditions.

16.  Promote and enhance interventions that:
 Encourage systemic and institutional change- the use of market-based incentives to
leverage the “enterprise” contribution to development
 improve governance and participation- mechanisms for improving access to
operating capital; and effective strategies for risk management and enhancing
the business skills of the Producer Marketing Groups.
 Attract more direct participation from the private sector
 Build advocacy capacity and alliances with “change agents”
 Sensitize members on the democratic principles of participatory group
governance through elections
 Provide initial start-up capital to kick-start their operations, and to encourage
members to increase their registration fees for membership to raise the
necessary minimum capital.
 Encourage increased annual contributions to the PMGs by the membership.
 Train and equip PMGs with business skills to facilitate effectiveness and
accountability in running the PMGs as business enterprises.
 Register PMGs as legal business entities and not as self-help groups, which
restricts their ability to access essential business services.
 Enhance the ability of the PMGs to access working capital through access to
financial credit: - encourage formal financial institutions to extend pig inventory
credit services to PMGs.