Strengthening trade in honey in Uganda

Janet Lowore and Nicola Bradbear

Trade enables the benefits of beekeeping to be translated into income for beekeepers: The greater the volume of honey trade, the more income realised by beekeepers. This is the premise upon which Bees for Development has been working in Uganda since March 2007.Our Project, Strengthening trade in honey and other bee products in Uganda, has taken a market literacy approach. This means working within the existing market system, understanding the parts of the market chain that are not working well — in terms of income for beekeepers —and addressing them. A major principle of this approach is the avoidance of establishing artificial structures or processes reliant on the Project. Working with our partners, The Uganda National Apiculture Development Organisation (TUNADO) and the Uganda Export Promotion Board (UEPB), the Project quickly needed to gain a good understanding of the existing market system.

Existing market system

There are thousands of beekeepers in Uganda, harvesting and selling honey. Honey is either used locally or is transported to distant markets such as the capital city, Kampala. Local markets can quickly become saturated because they are by definition small. Distant markets offer growth potential, but how do beekeepers in remote areas access markets that are far away? There are two main routes: the trader route or the direct to packer route.

The trader route involves a series of traders buying and selling honey, until the honey arrives at a final market point. Arua Park is a well-known honey trading location in Kampala, where honey from the trader route can be found in large quantities. It is often transported in yellow jerry cans, may be semi-processed and of varying quality.

The direct to packer route involves a packer buying direct from the beekeeper. Currently this happens particularly with beekeepers’ associations, for example Connoisseur, Kabarole and Kamwenge Associations. Larger packers, such as Bee Natural Products, also aim pack honey sourced directly from beekeepers. However, they have faced challenges because they operate on a larger scale and achieving largescale supply via the direct to packer route requires a high level of organisation. The packed honey is sold in shops in towns and especially Kampala. There are many reasons why the direct to packer route is more likely to lead to real development for the beekeepers, compared to the trader route, but it is more difficult to achieve.

What about price?

Which route delivers more income to beekeepers? Intuitively most of us think that a short market chain means producers will be able to negotiate a higher price per kilo, but this is not always the case.

A dedicated honey packer must operate at scale and therefore is thinking in tonnes not kilos. They may not offer a higher price per kg than a trader, but they may offer to buy more volume and more consistently. In this way a beekeeping group can be motivated to double production once they are connected directly to a packer, and this means double the income, even if the price per kg may be marginally lower than traders sometimes pay. Connecting beekeepers direct to packers has been a major part of our Project in Uganda.

The two main routes to market for honey in Uganda

TRADER ROUTE

Advantages:

- Most honey is traded in this way without donor support. This means the trade route works and is sustainable

- This route works for almost any quantity and quality of honey — which makes it easy to access for any level of beekeeper

- Beekeepers can sell at ‘farmgate’: an easy way to sell

- Small amounts of cash are moving through the chain all the time, so there is no need for any player to have much working capita! locked up at any one time.

Disadvantages:

- Beekeepers are not motivated to increase production because the trader to whom they sell does not motivate them. Rather traders try to push the price down by telling them the market is flooded

- Quality control is difficult

- No traceability

- Traders are opportunistic and do not invest in the industry

- No premium for high quality honey

- A beekeeper who wants to produce a larger volume of honey (eg one tonne), may not find a trader able to buy it all at farmgate.

DIRECT TO PACKER ROUTE

Advantages:

- Shorter market chain

- Traceability

- Good communication between packer and beekeeper can be achieved — this motivates beekeepers

- Serious packers need a large volume to achieve economy of scale — this presents an opportunity for beekeepers to harvest more and earn more

- Easier to establish the quality control systems that are necessary tor access to premium markets

- Beekeepers have a chance to participate in the market from a more informed position.

Disadvantages:

The direct to packer route is easier on a Small-scale than on a largescate. On a large-scale this route has the following challenges:

- Because the packer needs to focus on honey {to cover the cost of their investment) they need larger volumes to achieve economy of scale

- Cash flow difficulties, either to beekeepers who must bulk honey before sale (and wait for their cash) or to the packer, who is required to buy large volumes all at once in the honey harvest period

- Requires a collection centre that will! have overhead costs and demands a level of organisation not needed by the trader route.

Connecting beekeepers to packers

For beekeepers to sell their honey direct to a packer, they are advised to sell collectively to achieve economy of scale and to attract a reliable packer. In March 2008, the Project team visited two sub-counties in Nakasongola: Kakooge and Nakitoma. Beekeepers in these sub-counties each produce relatively little honey, and any sold outside the local area is all sold to traders. Beekeeping is not seen as an important source of cash because the traders do not motivate them to increase production, and beekeepers cannot be sure when traders will want to buy. At the same time, a honey packer in Kampala was looking for reliable new suppliers. The Project team spent a number of days with beekeepers discussing with them the concept of marketing their honey collectively and linking directly with the Kampala buyer. They understood that selling their honey together would be good because as a group they can

- negotiate better terms

- lobby for support from the Local Government and NGOs

- put resources together for a common cause, open a bank account for the association, and access credit

- monitor the quality of honey for their buyer.

They also recognised that only by offering a higher volume will they attract a good buyer, who in turn will motivate them to increase production. In the end they will earn more. However they also feared that some members may not trust others, and bulking can be a problem if the buyer delays. In the latter case, beekeepers would prefer to sell their honey quickly to anyone else, to earn money to solve their household problems.

After the discussion the beekeepers agreed to form trading groups at Parish level, where they all know each other. They would be helped to form trading groups by the community development officer.

A similar activity was undertaken in Lira where a new entrant to the honey packing business was looking for a consistent and reliable supply honey. Ongica Beekeeping Association had developed a honey enterprise over the past two years but without a reliable buyer, they were not motivated to increase their current level of production of one tonne each year. The Project team organised a participatory meeting between the beekeepers and the packer and together they discussed their expectations.

The beekeepers started off by listing many needs and expectations. Through discussion it was made clear that some help which the beekeepers needed could not be provided by the buyer. For example the buyer said she could not take on the responsibility of training the beekeepers or facilitating their internal organisation, but she could explain clearly her requirements in terms of quality. However she would work with the beekeepers to establish collection centre, would negotiate about the price and pay more for good quality honey, and would communicate with the beekeepers about any problems. She also said that she wanted to buy honey only in bulk and would prefer to pay by cheque into bank account of the association. She said that her target for the first year would be two tonnes, thereafter increasing to 10 tonnes if the beekeepers could supply it. After the preliminary meeting, it was agreed that further meeting was needed to plan the logistics and make an agreement for the first sale of honey to take place in September 2008.

Focussing on honey packers

The Project recognised that for more honey to be traded directly between beekeepers and packers, the packers also needed help. They need to have good knowledge of honey handling and storing, how to check for quality, and how to obtain good prices when they sell to shops. If packers can become well established, competent businesses, this is good for the whole industry. A series of packers’ training courses was organised by the UEPB focussing on:

- the importance of packers forming consistent relationships with Suppliers, as this will motivate suppliers to increase volume and quality

- the need for packers to change from being merely opportunistic to being committed players in the industry, prepared to invest

- the need to adhere to national standards that apply to food handling and processing

- access and management of finance, particularly at honey harvest season.

The most recent training was delivered by UK honey expert, Mr John Home. One output of this course was a Quality Control Point Chart for Uganda. This is a simple tool designed to help packers identify the critical points where honey quality may be compromised.

TUNADO

One of the objectives of the Project was to help build the capacity of TUNADO, the national industry representative body. TUNADO was established in 2005 with backing from the Ministry of Agriculture, recognising that the apiculture sector needs a voice and capacity to support the industry. The Project has worked with TUNADO to develop its role as information provider to the sector, to form new partnerships, hold an AGM (the first since its inception}, and define its role.

What next?

This Pilot Project was funded by Comic Relief (UK). The Project has helped to show that the benefits of beekeeping for the poor depend on the way trade happens, and that the market system deserves focus and investment. As one Ugandan packer, Gates Honey, pointed out, honey packers cannot pay for the work needed to help beekeepers become organised and form direct links with them. There remains a need for external support. As funding allows, Bees for Development remains committed to supporting honey trade in Uganda, and beyond.