Effectiveness of second-tier rural producer organisations in linking smallholder farmers to markets in Uganda

Abstract

The agricultural sector is key to the attainment of general economic growth and poverty alleviation poverty in Africa. Therefore, it is important to develop the sector and this requires removing constraints limiting smallholder farmers to compete in markets. Collective action, in the form of rural producer organisations (RPOs), is often essential to achieve competitiveness. The RPO route to commercialisation of smallholder agriculture has been embraced in many developing countries, including Uganda. However, little has been done to analyse the effectiveness of RPOs in this regard.

In Uganda, RPOs have been welcomed and popularized by the government, with limited empirical evidence on suitable models of organisation that can benefit most smallholder producers. Despite reasonable investments in RPO approaches and wide involvement by the public and private sectors and the donor community, smallholder market participation remains low. There is, therefore, a need to understand the extent to which the RPO approach is an effective option for commercialising smallholder agriculture.

The purpose of this study was to assess the effectiveness of second-tier associations and cooperatives in linking their members to markets and to identify factors which determine their effectiveness. The goals model was applied on two units of analysis, namely, the RPO and individual members. At RPO level, effectiveness was measured using the proportion of members that marketed products through their RPOs as a dependent variable. Relationships with explanatory variables were determined using an ordinary least squares regression model. At individual level, the proportion of revenues generated by members from selling products through the RPOs was the dependent variable. Relationships with explanatory factors were analysed using a one-way between-groups analysis of variance (ANOVA). Further analysis looked at distribution of benefits among the members across gender and socio-economic status using the Kruskal-Wallis test. The analyses were based on primary data that was collected from 62 second-tier RPOs and 1,377 individual RPO members.

The results of the study indicate that marketing RPOs are not effectively linking their members to markets. Democratic governance and RPO size show a significant and positive effect on the proportion of members selling through their RPOs. On the other hand, factors such as age, access to price information and improved planting material, and training in quality management positively influence the proportion of revenues that members obtain from RPOs. Regarding benefit distribution, the more literate and asset-rich farmers had access to more benefits compared to the less literate and asset-poor farmers while men had access to more benefits than women.

Drawing from the study findings, various recommendations for improving RPO effectiveness are put forth. With respect to governace of RPOs, using smaller executive committees and additional sub-committees seems a better governance strategy for improving the effectiveness of RPOs. Whereas capacity building of leaders is important, newly-learned management procedures should be implemented in a way that does not hinder member participation. Effective RPOs should be established through members’ initiative, possibly, as a strategy to overcome a felt problem. Similarly, effective market linkages should be established by producers so that they have an opportunity to foster and develop profitable business relationships. Other aspects that can enhance effectivenes of RPOs include increasing member access to extension advisory services and market information, reviewing rural finance delivery mechanisms to meet a broad range of smallholder needs and focusing and developing one marketable enterprise until businesses mature. There is also need to institutionalize practical guidelines that enable equitable participation and benefit access among all categories of member producers. Specifically, action-oriented strategies are required to include the less educated, asset-poor and women, as well as ensure that they are benefiting from RPOs in which they are members. Lastly, the government has a role to deliver on promises made regarding development of RPOs in the country.