Saturday, October 1, 2011

Uganda needs more Cereal banks to curb effects of acute food shortage

Women farmers in Kenya at their cereal bank (ips.org)
Most farmers in Uganda annually face this scenario. During the rainy periods, there is plenty of food: beans, maize, bananas, pineapples and most farmers are forced to sell it at low prices because of an abundant supply of fresh produce in the market with low demand.

During the lean periods, the opposite is true, scarce food supplies prompting a high demand from the market. The high market demand comes along with a big increase in prices for food items which often catches the local farmers without anything to sell or instead having to buy food at these high prices to feed their own families!


How a Cereal bank can work

A cereal bank is a community-based institution involving a village or a group of villages that stocks and manages the operations of acquiring, pricing and supplying grain. The purpose of the cereal bank is to improve food supply during the lean seasons, especially during extended drought periods.

Cereal banks are a combination of warehouse and financial institution, where farmers can deposit their harvest and receive a receipt. By storing their grains in warehouse or store, the farmers wait until prices increase before selling their harvest in the market. Therefore, they do not have to sell their crops when prices are at their lowest following a bumper harvest.

During periods, just after the harvest when food prices are low, grains are bought from elsewhere. The grains are stored until they are needed and then sold to the villagers at a reasonable price.

When the market prices are high and their granaries are empty, they can buy grains from the cereal bank at an affordable price.

Setting up a cereal bank is the best response to the quest for food security. It involves sharing resources and is one way for people to help one another in times of need. A cereal bank can function in several different ways depending on the requirements of the community.

Cereal banks or commonly called “Silos” are now being set up by the government but this can be done on a lower local level by the different farmers groups in every village and town. Besides, government projects often take a long time to materialize. It is always better that the local farmers group start their own cereal bank and seek government support to expand their operations.

Objectives of the cereal bank

  • To buy grains from member farmers and loan them back during leaner periods.

  • To help members improve their farming methods to increase food production. This can be in form of availing farmers with good seeds to plant, fertilizers, food preservation methods. 

  • To avail farmers with good seeds during a planting season. There are so many counterfeit seeds that lead to low or bad yields at the moment. Transfer of crop diseases from one part of the country to another are also reduced.

How Cereal bank can be organised and run
Starting Capital – Membership should be open to all people within the community. Every member of the group is required to contribute either in cash or in offering an equal amount of produce. For instance, an individual can contribute 5 bags of maize, ¼ bag of beans and Ugx. 30,000/=.

Contributions should done immediately after the harvest season, the period of food abundance. Any subsequent contributions are made depending on arising needs upon which members decide upon.

Loaning, interest and repayment - The grains are loaned back to the farmers during the dry or lean season, upon which they are required to repay back with some interest during the next harvest season. The loanee gets food in terms of grains and repays back in kind. The repayment period is one year, which is the difference between one harvest period and the next.

Both members and non-members are charged interest on the grains loaned to maintain the community cereal bank. For a 90kilogram bag of maize, one repays back with an interest (or an extra) of 20kilograms bag of maize. A 10 kilograms bag of beans fetches an interest of 2 kilograms.

Penalties should be given out to debtors who fail to repay according to laid out procedures. A member who defaults risks losing his or her initial contribution to the group and group membership.

Other rules apply to non-members whose loans are guaranteed by members. The burden of follow-up and payment of loans by the non-members rests entirely on the member who acts as a guarantor.

The group is not directly involved. It is upon the guarantor to ensure that the defaulting non-member pays the whole loan, failure of which the member risks losing his or her initial contribution to the group.

The members of the group are not required to give any security before grains can be loaned out to them. However, a member of the group must guarantee a non-member before the loan can be approved.


Benefits of a cereal bank

  • Since the cereal bank is within the village, the farmers do not have to travel long distances in search for grains. This saves time as well as transportation costs.

  • The villagers are paid a better price for their food produce even when the market prices are low ensuring that they have money in their pockets to feed and clothe their families plus paying other expenses.

  • Non-members farmers to the cereal bank benefit by accessing grains during the off-peak season at a price that is much lower than the market rate, which would otherwise have been unaffordable.

  • The community gets access to proven good seeds for planting during the rainy seasons, greatly reducing cases of farmers being sold counterfeit seeds sold all over the streets.

  • The community becomes self sustaining regarding food matters instead of relying on food aid during drought or periods of acute food shortage.

  • The cereal bank helps farmers deal with issues of marketing and storage. Using the cereal bank, the group can negotiate better market prices with wholesalers than individual farmers on their own. With the cereal bank having far superior storage capabilities, farmers can continually use it to store any food items they have harvested in excess reducing amount of food that rots from poor storage.

Cereal banks have greatly improved the living standards of many farmers in Africa, the World Food Program has a story of cereal banks in Niger. Also do check out our resources page for more case studies.

Share with us in the comments below, how you are tackling the issue of food security in your community, as a group or individual.

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