At a recent meeting of small-holder farmers of Putiputi sub-County in Paliisa district, in eastern Uganda, Fatuma Kadondi raised a sensitive issue.   

“Men have been cheating us,” she said. “After harvesting rice, they take the money and when you ask about it they become violent,” said Kadondi to the applause of the women attending the Nagule United Farmers Group meeting. The men laughed.

“So, I decided to divide the land into two parts so that I grow my own rice. My husband accepted and now I have my own money after harvesting and there is peace in my home,” she said.

While Kadondi may have resolved the money issue with her husband, she still faces the challenge of dealing with money lenders, whom she calls “the rich men and women,” and middlemen who cheat peasant farmers out of their produce. 

The middlemen have taken advantage of the lack of marketing structures for agricultural produce and access to financial services to make huge profits at the expense of the farmers. The “rich men and women” employ different tactics to do so.

One of these is seeking out poor farmers in the villages who cannot secure bank loans to facilitate crop growing and offer them as little as $40. This usually happens at the start of a crop season. At harvest time, they return and demand for the crop at low prices.

“I used to go to Paliisa town where I met rich men from Kampala who gave me money, but when they returned during the harvest season, they would set the price of milled rice at just $0.03 per kg,” said Kesiron Gasalain, a male member of the group.

Banks have been reluctant to lend smallholder farmers because of the risks associated with bad weather patterns, pests and diseases which lead to crop failure and consequently default on loans. Even though some banks are beginning to consider agriculture financing, the do not do not have branches in rural areas where farmers can access the services.

So the loan sharks show up during harvesting season and demand the produce instead of the cash. They will take a 100kg bag of milled rice as payment for the $40 the farmer borrowed. That price sets a benchmark for the rest of the farmers within the locality.

The prevailing market price could be as high as $100 of 100kg milled rice elsewhere, and rises as supply drops. This means that the farmer is left with nothing to take him through to the next harvesting season — leading to a cycle of poverty.

In the meantime, the money lender takes the cheaply bought produce to upmarket destinations like Kampala or around the borders with Kenya or even to South Sudan where he sells at huge profits. Had the farmer sold say a 100kg bag of milled rice in Kampala, it would fetch him $110 during peak supply and more with a drop in supply. Middlemen too, have found a way of determining the price of produce.

“A middleman could have bought rice at say $100 per 100kg bag, when they come  the next day, they claim prices have dropped and so should the farm gate prices. That way, they determine the prices,” Wilberforce Segula, the acting technical officer in charge of Doho Rice Irrigation Scheme said.

The Paliisa story mirrors what happens to many farmers around the country. In Apac district in northern Uganda, the middlemen known as produce dealers not only determine the prices but often demand what the farmers have not produced.

“When farmers produce a lot of sesame, they raise the prices of maize arguing that sesame is not on demand in the markets where they trade. They keep confusing farmers and this discourages them from farming,” said Okae Bob, Apach district chairman. 

In the past such problems were not common because farmers sold their produce under co-operative unions. The Coffee Marketing Board and Cotton and Produce marketing for example helped farmers to not only access inputs but also credit in addition to bulk selling. Only Bugishu Co-operative Union has survived to date. 

On the flip side, government is making fresh attempts to revitalise co-operative societies by encouraging farmers to form new ones. The Ministry of Trade, Industry and Co-operative is mandated to oversee the activities. There is also a co-operative training institute in Kigumba, northwestern Uganda.