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Chairman at Uganda UK Convention – An Investment Forum
Uganda Diaspora Investment Expo 2013 will be the largest Ugandan and East African event in Europe that is designed to promote Uganda and East Africa at large as a favorit investment destination in Africa. The Expo will offer companies large and small the opportunity to access our lucrative and often overlooked market. The Convention will focus and contribute to the economic empowerment of the Ugandan community through the Expo.

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Pig farming in Uganda, haraam or hidden pearl?

In considering this business for investment, one must be conscious of religious sensitivities particularly as about 12% of Uganda’s 35m population is Muslim. This is about 4.3m people and thus fairly significant as it would almost be haraam (loosely translated means taboo or “forbidden” in Arabic) to start this business in a neighbourhood which has a sizeable Muslim population, like say Mbale – my home town.

 

Whilst on the religious subject, it is worth remembering that Matthew 7: 6 says; “do not throw your pearls to pigs. If you do, they may trample them under their feet, and then turn and tear you to pieces.”

 

I have recently invested in a 50/50 joint venture with a family friend to start a piggery project in Mbale. I provided the start up working capital and he provided the land and housing. I am still unsure whether I have thrown my pearls (i.e. money) away as it has been over 1 month and there are still no signs of the project’s progress by way of photos or a progress report.  His phone is off and I have no other means of contacting him.

 

It reminds me of another farmer friend who I recently spoke to. Someone broke into her farm in Jinja and run off with 3 adult pigs, squealing and all I imagine. Her security guard told her that he was drunk at the time and thus didn’t hear anything. I however believe they(pigs) were stolen in connivance with the security guard because; first a grown pig weighs about 120kg and secondly they can squeal so loud at say 130 dB.  To put this into perspective, that is considered higher than the highest safe level for hearing (120 dB). Other sources compare a frightened pig’s squeal to the sound level of a jet taking off i.e. 113 dB. Either way, that’s pretty loud.

It is therefore hard to understand how these 3 grown pigs were stolen without the guard butting an eyelid, drunk or not.

The first ground rule therefore in establishing this business in Uganda is to ensure that you have reliable business partners or employees or else you will lose your “pearls” to pigs (literally).

 

There are other considerations you need to look into prior to investing in this sector.

 

FIRST THE CONS

 

1.Feeding

Pigs eat enormous quantities. A fully mature pig especially one to rear for commercial purposes will eat about 3.4kg a day. A growing one eats on average 2.02 kg. If you are buying animal feed, which comprises mainly maize meal then the cost will be significant particularly given the steadily rising maize prices in Uganda (owing to droughts). You have two options to countering this high cost:

 

  • Option 1: Grow your own food i.e. maize and vegetables to feed them and supplement this with protein(say fish or soy meal).
  • Option 2: Ensure the pig farm is located near a major boarding school and/or a hotel/restaurant so that you can pay cheaply or next to nothing for their left overs like maize/corn meal (called  “Posho” in local speak) and beans from the schools (corn meal and beans are a staple food in boarding schools in Uganda and so readily available).

You can then supplement the maize and beans meal with leftover protein meal say chicken or beef from hotels/restaurants. Another alternative but cheap protein source is Dagaa/Omena fish (called “mukene” in local speak) .  Pigs are after all omnivorous and will literally eat anything(don’t however feed them rotting food).

 

2. Cash flow/Working capital

Like most agriculture related activities, particularly in Uganda you need to have cash on hand and particularly for at least 11 months(growth and gestation period for pigs) before you start earning from the sale of the pigs.  This is especially a key consideration as there are no advanced credit card facilities and agriculture loans particularly without security are hard to come by in Uganda.

 

3. Diseases

Pigs are susceptible to several diseases and it is not uncommon for there to be quarantine following disease outbreaks like the deadly African Swine Fever. It is therefore critical that as part of the start up you establish an arrangement with a Veterinary officer who will be available for scheduled immunisation, routine checks as well as emergencies. The Government programme under the NAADS scheme may help in providing free/subsidised veterinary services, I however recommend a private arrangement to ensure regularity as sometimes civil servants in Uganda are not reliable.

 

4. Water source.

Pigs have no sweat glands and so in order to cool off they need water (or a “mud bath”). Likewise you need water to clean out their pens and feeding areas especially as their population increases- and it does rapidly! It is therefore critical to have loads of water. I therefore advocate that you locate the pig farm near an easy water source such as say a swamp or that you install a water tank to harvest rain water. These are the cheapest and most effective options in Uganda compared to piped water supply from NWSC.

 

AND NOW THE PROS

 

1. Less intensive management.

As long as you invest in good housing that for example properly segregates lactating sows, has separate feeding and sleeping areas and the like then with a little land you can easily manage pig farming with few staff.

 

2. Profitability owing to demand.

A lot of sources believe pig farming is one of the most profitable ventures in animal farming particularly as they require less intensive management compared say to poultry or dairy farming. The profitability in Uganda is driven by the huge demand for pork

 

As per a Uganda Bureau of Statistics Livestock census in 2008 there were just over 3.1 million pigs. Assuming growth rates since then on the basis of the economy growth (real GDP) which was about 7.2% in 2009, 5.20% in 2010 and 6.4% in 2011, then the pig population is estimated at 4.3 million at 2012. This is still a very small number especially when compared say to chicken which per the same census were over 37 million in 2008 and therefore estimated (on the same basis of GDP growth) to be 44 million in 2012.

I can therefore expect that there will be a continued demand for pork and over time other related industries will develop for pork products such as sausages, bacon, gammon and the like particularly as the population’s income levels increase(driven by economic growth).

 

On the basis of a model analysis I have developed, I summarise the profitability of investing in piggery in Uganda as below:

Return on Capital for pig farming(piggery)

  • Start-up Capital(including working capital for 11 months) (A): Shs. 7,738,248
  • Profit per year* (B): 2,681,086
  • Return on Investment/Capital (years to get capital back) (A/(B)*: 2.886 years.

*The profit is being calculated over a 14 month period comprising of season 1 and season 2.

It should therefore be noted that the original investment/start up capital will continue to be recovered in seasons 3 onwards as the piglets from season 1 and season 2 mature.

Final word

Given the low level of initial capital and low general running costs, this is definitely a sector worth considering and it is therefore perhaps the pearl you are looking for.

About the writer:

Dickson E Wasake (ACCA) is a principal at Inachee.com – a thought leadership firm. For over 8 years he has worked with clients in Uganda, The Bahamas and the United Kingdom providing audit, tax, accounting and advisory services. His experience with various sectors including agriculture enables him have good understanding of this sector.

The full article including the detailed model/analysis on this sector can be found at:

http://www.inachee.com/the-sector-analysis.php

 

Chairman at Uganda UK Convention – An Investment Forum
Uganda Diaspora Investment Expo 2013 will be the largest Ugandan and East African event in Europe that is designed to promote Uganda and East Africa at large as a favorit investment destination in Africa. The Expo will offer companies large and small the opportunity to access our lucrative and often overlooked market. The Convention will focus and contribute to the economic empowerment of the Ugandan community through the Expo.

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