Contracted For a Beer: Farmers Take-on Barley and Sorghum to Boost Income

On a windy Wednesday morning, crops swing side to side. Slightly tipping each other, they make a hush sound. Green in colour, a single barely crop – a good yielding one – can be stretch to the elbow of a 5 foot 6 inches person.

Moses Ecadu, a sorghum-for-beer farmer in Gweri, Soroti District
Moses Ecadu, a sorghum-for-beer farmer in Gweri, Soroti District

About 300 kilometres from Uganda’s capital Kampala, are the rolling hills of the Sebei region in the east.

Dominated by small waterfalls, they are also the source of barley, a light green crop used in the production of Club and Bell Lager. Estimates from regional authorities indicate that almost all the farmers grow barley.

In Kapchorwa town, located uphill and overlooking the low-lying areas of Eastern Uganda is the hub/collection centre for the barley. It is only just the start. Further uphill are Kween and Bukwo districts, where farmers have taken on barley.

Moses Kiptala is a tall lankly figure who rides a Yamaha motorcycle. He is a farmer in Bennet Sub County, Kween District. It took almost two hours to locate Kiptala.

The road is bumpy, narrow and sometimes slippery due to the rain. Kiptala has three gardens where he practices mixed farming.

The largest concern from farmers in the region in the highlands is poor road network. While driving towards the highlands, the fastest a car can go is no more than 30kmph.

Getting the produce down to the warehouses or agent shops is tougher than it looks. If there is one common scene in the highlands, it is donkeys.

The donkeys transport produce to a distance good enough for the trucks to pick up.

“…deficient infrastructure, including roads and bridges that are often impassable during and following rains, force many farmers to rely on donkeys for transport, a painfully slow and inefficient process,” reads the Nile Breweries sustainability report.

At least 9percent of Ugandans consume beer, according to the World Health Organisation report of June 2014. The most popular beer brands in Uganda are Senator, Eagle Larger, Bell Larger and Club Beer.

These are produced by the two multinationals, Uganda Breweries/East African Breweries (EABL) and Nile Breweries, subsidiaries of Diageo and SABMiller respectively.

Senator and Eagle Larger produced by EABL and NBL respectively account at least 50percent in sales volumes. For instance, Nile Breweries, sales of the Eagle Brand are now at an estimated 192 million bottles per annum.

They are also the cheapest on the market with a bottle going for Ugx2000 ($0.3) compared to the Ugx3000 ($1.2) for the other beer brands.

In 2001, government agreed to give beer companies a tax rebate on beer produced locally sourced ingredients. The companies instead of paying 41% excise duty get to pay about 21% on the beer produced using barley, sorghum, maize and more recently cassava. The farmers went to work. The income appears to be delivering results.

In 2003, The Economist had a story headlined “The Eagle has landed.” In the story, the magazine heralded the move by Nile Breweries as a beer innovation.

The crop in question here was sorghum used in the production of Eagle Lager. “Until recently, the main alternative was a cloudy, foul-smelling and sour brew made by local families.

But now an innovative new local lager is challenging these rivals—leading some to wonder if it will change the way that beer is made everywhere,” the economist article noted.

A variety of Sorghum known as epuripur was development by the National Agricultural Research Organisation (NARO) and dispensed to farmers mostly in the low lying regions of Teso. Barley was taken on by farmers in the highlands.

Sorghum, according to Sam Ecadu, a farmer in Gweri Sub-county, Soroti District is dubbed a “school fees crop” in the region.

Ecadu also grows Oranges and in one of his rooms is the “storage facility” for the sorghum. Before he can sell it, it has to be dried. Every morning he puts it out to dry.

Regular sorghum sold on the open market is different from that used in beer production. The beer production sorghum is called white grain.

The seeds are almost white once they are ripe for harvest. The regular sorghum sold on the open market has a brown like colouring. Even the pricing differs.

Epuripur sorghum is sold at Ugx700 per kilogram, a price that has been on an upward trend since 2001. Regular sorghum prices are lower and volatile depending on the demand.

Francis Opio sits on a wooden round chair under a jackfruit tree in his homestead. His homestead consists of five grass thatched houses. His wife keenly listens on as she pounds ground nut for dinner.

He has been growing sorghum since 2001. At the start, he says, the price was as low as Ugx300 per kilogram.

He also emphasizes that the 90 days cycle it takes from planting to harvest, the crop helps with raising funds for school fees.

Most farmers are small scale and grow barley or sorghum, the breweries often point out. The admission by most farmers is that if they had larger gardens, then their earning would be higher.

Nile Breweries in it 2014 Sustainability report does admit that “fragmented gardens due to land tenure system and lack of commercial farms” makes it more complex to transport and source the local raw material.

The middleman

Along the shores of Lake Victoria, at least about 10kilometers from the Kampala City Centre is a place called Port Bell. Named after Sir Hesketh Bell, a colonial era British Commissioner, it has turned out to be an industrial town. This is the home of Uganda Breweries.

Here, Joseph Kawuki, an agri-business manager at EABL, says the farmers sell their produce to agents contracted by the beer company at a set price. He also says the contracts are not signed with farmers but rather with bulking agents.

The prices set by the beer companies are usually the same. If any company increases the price, the one follows suit and vice versa.

Soroti Municipality is considered the regional capital of the Teso Region in eastern Uganda. It is about 420kilometers from Kampala.

There on a Saturday afternoon, Ruth Okiror is the Managing Director, Acila Enterprises making sure bags of sorghum are loaded on a trailer truck.

Acila Enterprises is an agricultural inputs company and agent for Nile Breweries, the SABMiller subsidiary. This year alone, her company will supply about 2000 Metric Tonnes of sorghum to Nile Breweries.

Pinned at the entrance of her rather busy shop is a notice from Nile Breweries indicating the prevailing price of the sorghum they will be buying per kilogram.

She hesitates when asked the final price paid by the beer company per kilo-gram of sorghum she buys. This is a question every agent evades.

She further explains that as an agent, it is more than just buying the crop, but that there are other costs involved.

Another agent in the neighbouring district, Serere, does explain that the price they get from the breweries is higher than the farm-gate price.

To mention the price per-kilogram he gets per kilo-gram, he requested his name be concealed to avoid a backlash with other agents and farmers.

“On each kilo-gram, after the processing, cleaning and transporting are complete, it will cost between Ugx850 and Ugx1000. It is however subject to approval by the beer company,” he reveals.

At East African Breweries, agents can be seen walking into the accounts office with documents. Before the beer company can accept the produce, there is a price ceiling and floor. Officials from the beer companies point out that the farm gate price is usually the minimum.

As a result of the higher income margins, there have been concerns that it could have negative implications on food security especially in the Sebei and Teso regions.

That is not the case, however. Maize and Cassava are still being grown in the low lying areas and Irish potatoes are also grown in the highlands.

Increased demand

In 2014, Diageo is estimated to pay about Ugx20bn to 15,000 farmers in Uganda for at least 30,000tones of local raw materials. Nile Breweries in 2013 says it paid about Ugx22bn to about 19,000 farmers.

The numbers keep going up. For instance in 2003, NBL used to purchase 1,600 tonnes of sorghum, this has since increased to almost 9,000tons per annum to date.

The supply for barley specifically is yet to meet the demand. In 2009, SABMiller completed a US$20m investment in a malting facility which would require 20,000tons of barley annually.

Only 11,000tons of barley are currently being used by the SABMiller subsidiary.
It is this competition from the two breweries that farmers attribute to the rising prices for their produce.

In 2004, the BBC World Service wrote, “Eagle Lager is still one of the top brands in Uganda, and has succeeded as a bridge between conventional and traditional beer.”

At a bar in Soroti, revellers are watching the Uganda National team; The Cranes play the Ghana Black Stars in the 2015 Africa Nations Cup qualifier.

Uganda won the game by a goal to nil. As the revelers cheered on late into the night, beer was always on the table. Sales went through the roof that night and for one farmer, a child will be going to school as a result.

This story was supported by a grant from the African Story Challenge, a project of the African Media Initiative.

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