30 September 2020

5 minute read

Africa

Preliminary research from the University of Oxford and Makerere University contrasts the milk and fish supply chains in Uganda and finds key lessons for supply chain resilience worldwide.

Uganda's milk value chain has been remarkably resilient to the stringent measures introduced by the Ugandan government to contain the COVID-19 outbreak. Despite being highly perishable, our research suggests that dairy milk supply appears to continue without large sales or price fluctuations in the country. Indeed, milk powder, which is made from fresh milk, has been the only food item other than staple foods maize flour and dried beans the Ugandan government distributed to vulnerable households as food emergency relief in the COVID-19 crisis.

By contrast, several other food supply chains in general, and perishable food particularly such as fish and vegetables, have been badly affected through the COVID-19 crisis. Small-scale farmers in rural areas and people working in the urban informal economy have both suffered from dramatic income reductions. Food shortages in Uganda have severely affected households in urban slum areas. Urban dwellers usually do not have the space to grow their own food, relying on markets for food supply. A preliminary survey we conducted with 75 households in slums in Uganda's capital Kampala found that during the lockdown, households were consuming more than one meal a day less on average than before, bringing the average number of meals consumed down to slightly above 1. This reduction is despite the fact that over 60% of the survey respondents received food aid from the government.

A global challenge

The World Food Programme estimates that globally, the COVID-19 pandemic is estimated to double the number of people in acute food insecurity to 265 million unless rapid action is taken. In children, brief periods of malnutrition can lead to long-term negative effects on cognitive, physical and emotional development. Thus, ensuring that nutritional needs of children are met at all times is critical. Milk, either fresh or as a powder, can play a critical role in supplying key nutritional value to children. The ability to produce such vital items locally, facilitates an independent and quicker response to food crises compared to having to rely solely on international shipments, especially in a case of a global disruption such as the COVID-19 pandemic.

So what can the global community learn from the resilience of the milk value chain in Uganda, a country with a rural electrification rate below 20% and ranking 159th out of 189 in terms of the human development index?

Adequate storage infrastructure for COVID-19 resilience

Uganda's dairy industry has invested heavily in well-functioning milk cold chains and storage facilities. This ensures that the milk does not perish in the short-term and survives rapid disruptions. In addition, there are several large-scale milk processing plants in South Western Uganda which routinely convert roughly one third of fresh milk into milk powder, greatly prolonging the shelf life of milk to balance larger medium-term demand and/or supply fluctuations. This is especially critical as vulnerable households in low-income countries often do not have access to electricity, let alone to reliable domestic refrigeration. The combination of short-term and medium-term storage options has meant that the dairy industry was able to cushion transport disruptions.

A key structural reason for Uganda's dairy industry being able to build effective cold chains is the high level of bottom-up aggregation. Similar to other food products, the dairy industry features a large number of small-scale farmers in Uganda. Yet much of the produced milk in South Western Uganda, the country's leading milk producing region, is aggregated before it is sold. Several hundred formalised and hierarchically organised dairy farmer cooperatives exist throughout the country, roughly 70% of South Western Ugandan dairy farmers are organised within local-level cooperatives. The cooperatives collect milk from small-scale dairy farmers, manage its distribution, and counteract price and supply shocks for farmers. This aggregation has implied the scale necessary for cooperatives and large milk processors to build up dairy value chain infrastructure which would not be possible for small-scale farmers given the challenging environment in Uganda to access finance. It has enabled both a short-term and medium-term resilience to supply and demand fluctuations critical for mitigation during the COVID-19 crisis.

Uganda's fish supply chain: a counterfactual

Uganda's fish supply chain is an example of a direct opposite to the country's dairy industry. The fish value chain largely collapsed following the COVID-19 lockdown. There is almost no cold chain coverage. Fish from the large fishing grounds of Lake Victoria, Africa's largest lake, is either not cooled at all or limited to small-scale ice sellers. There are no large-scale fish storage or freezing facilities, fish transport is mostly organised in small vehicles, food waste was high even before the lockdown. No large-scale processing plants exist for potential alternative storage such as smoking, drying or canning fish. Unlike the dairy industry, no strong fishing cooperatives exist, levels of aggregation are low and few players in the value chain have sufficient scale for necessary cold chain investments.

Improving nutritional value of food aid through shock-resilient perishable food

Contrasting the Ugandan milk and fish value chains yields numerous implications for short-term relief and long-term food value chain resilience against shocks. In the short-term, it is critical to maximise the nutritional value of food aid required to combat the COVID-19-induced food security crisis.

Perishable food is a key source of essential nutrients. In Uganda milk has become a critical domestically sourced item for rapid food aid, enabled by a highly aggregated supply chain which combines critical short-term cold storage and milk powder production to extend shelf life. For other perishable food, different processing steps exist to avoid the necessity of domestic cooling, for example canning fish, drying fruit or pickling vegetables. Designing food emergency relief should therefore try to build on context-specific value chain which combine nutritional value and shock resilience.

In the long-term, building up shock-resilient food value chains of perishable food implies a necessity of overcoming the high upfront investment burden of the required infrastructure. The dairy case in Uganda suggest that aggregation is a key lever, others could entail large-scale appliance finance and servitisation schemes. It is critical to build up sufficient inventory of processed food with longer shelf life which can be dispatched quickly in times of a shock. In Uganda, despite the existing infrastructure, there are fears that milk powder stocks are not sufficient to deliver adequate food aid to people in need in Uganda.

TheCattleSite News Desk