Millet trade finance presentation final 1 october
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Millet trade finance presentation final 1 october






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Millet trade finance presentation final 1 october Millet trade finance presentation final 1 october Presentation Transcript

  • USAID LEAD Project Facilitating Smallholder Farmers’ Access to International Markets 4 October 2010
    • USAID LEAD Project is a $35 million / 5 year project that targets 600,000 households and is structured to improve livelihoods of smallholder farmers in rural sectors.
    • LEAD is a VC structured project, with five key targeted VCs
    • Besides working in agricultural VCs, LEAD also encompasses x-cutting components, including a Financial Services component
    • LEAD aims to 1) ensure food security and 2) incorporate smallholder farmers into highest value markets.
    • Constraints to penetrating higher value markets include low quality standards, lack of finance, insufficient identified buyers, and/or slowness of payment by commercial buyers.
    • LEAD partners with other stakeholders to facilitate smallholder farmers’ access to higher value markets.
  • 8a Payment of warehouse Fees 6a Caveat place on WR by Equity Bank 8c Caveat removed on WR by Equity Bank 7 Full Payments for WR received 8b Net payments direct to PO accounts 9 Transfer of WR to UNGA 6b Advance on WR 10 Presentation of UNGA WR 11 Release of Millet to UNGA 1b Issues Floor Price for Millet
    • 2 LEAD Farmer Groups Mobilization
    • Mobilization and sensitization
    • Production support
    • Quality Assurance
    • Millet aggregation and delivery
    • Training on Fund Management
    • 4 WFP Warehouse – Gulu (UCE licensed)
    • Cleaning and drying
    • Issuance of electronic Warehouse Receipts
    • Storage and Collateral Management
    Equity Bank-Uganda UNGA Ltd, Kenya 5a Issuance of Copy of Warehouse receipts and warehousing invoice 3 Delivery of Millet STRUCTURED EXPORT TRADE FINANCE FACILITY – SEQUENCE OF EVENTS Title Document/WR Transfer Money Payments 5b Issuance of WR and WH invoices 1a UNGA and Bank sign agreement on terms of Unga’s purchase of the millet Physical Millet Delivery View slide
    • Financing Mechanism
    • Need reliable partners : Buyer, Seller, Bank, Licensed
    • Warehouse
    • Basic Steps to fix costs/income :
    • - Buyer and Seller agree quantities, price, quality
    • standards, delivery schedule
    • - Buyer, Seller, and Bank agree financing/payment terms
    • - Determine costs of warehousing (off loading, cleaning,
    • drying, bagging, issuance of warehouse receipts,
    • storage charge, on loading)
    View slide
    • Financing Mechanism
    • Document Transaction Flow:
    • Memorandum of Understanding between Buyer, Seller,
    • Bank, USAID LEAD – defines role of each entity
    • Letter of support from World Food Program re
    • warehousing
    • USAID LEAD – set of procedures established for
    • farmers/Producer Organizations (growers) supported by
    • LEAD
    • Financing Mechanism
    • Main Elements :
    • Unga sets guaranteed floor price, buys at higher of floor
    • price or market price at time of purchase
    • Equity Bank advances 60% of floor price to POs at point
    • when warehouse issues warehouse receipt assigned to
    • Equity Bank – no additional collateral required
    • Farmers free to sell to Unga or a third party at all times
    • Unga pays for millet at time of purchase
    • Equity Bank deducts advance amount, its fees and
    • interest, and warehouse fees from Unga payment, and
    • pays balance to POs
    • POs distribute advance and net payments pro rata to their
    • members
    • Millet Production Economics
    • Current Market Price = 840UGX/Kg = USD$0.37/Kg
    • Unga Floor Price Offer = 485UGX/Kg = USD$0.22/Kg
    • Traditional Production
      • Yield Range 350 – 600 Kg/Ac, Avg. = 500 Kg/Ac
      • UCOP about 500 UGX/Kg = USD$0.22/Kg
      • Farm Gate Gross Margin = 170,000 UGX/Ac = USD$75.55/Ac
    • Production using Modern Agronomic Practices
      • Yield Range 900 – 1,600 Kg/Ac, Avg. = 1,000 Kg/Ac
      • UCOP about 430 UGX/Kg = USD$0.19/Kg
      • Farm Gate Gross Margin = 410,000 UGX/Ac = USD$182.22/Ac
    • Immediate Actions by USAID LEAD
    • Sensitizing Farmers in Acholi-Longo Sub-Regions
    • Radio Announcements in Local Languages
    • Outreach in 11 Districts through 11 USAID LEAD Field Officers and 132 Field Facilitators working with Producer Organizations encompassing 31,000 Farmers
    • Outreach through four Grantees of USAID LEAD and their extension staffs to 56,000 Farmers
    • Coordination with the WFP warehouse in Gulu, UCE, Unga Millers and Equity Bank to make sure the physical handling aspects and warehouse receipt system can function properly
    • Actions “To Do” by USAID LEAD for 2011 Seasons
    • Sensitizing Farmers in Teso Sub-Region, the real “home” of millet production in Uganda
    • Radio Announcements in Local Languages
    • Outreach in 7 Districts through 7 USAID LEAD Field Officers and 70 Field Facilitators working with Producer Organizations encompassing 17,000 Farmers
    • Outreach through 5 Grantees of USAID LEAD and their extension staffs to 39,000 Farmers
    • Preparing to use the WFP warehouses in Soroti and Tororo based on lessons learned in Gulu
    • Reaching out to other buyers, especially in South Sudan
    • Contact details:
    • USAID LEAD Project
    • Plot 58 Lumumbe Avenue, Nakasero
    • PO Box 1709, Kampala, Uganda
    • Telephone: +256-(0)312-216700
    • Susan Corning, Chief of Party – [email_address]
    • Paul Forrest, Agriculture Unit Director – [email_address]
    • John Fitzgerald, Financial Services Director: - [email_address]