WORLD TRADE  
ORGANIZATION  WT/CFMC/W/27 
15 May 2008 
 
 (08-2236) 
 Original:   English 
  
DIRECTOR-GENERAL'S CONSULTATIVE FRAMEWORK 
MECHANISM ON COTTON 
 
Cotton Projects
1 
 
Communication from Uganda 
 
 
 The following communication, dated 17 July 2007, is being circulated at the request of 
the delegation of Uganda.  
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PROJECT N° 1  - SUPPORT TO FA RMER GROUP FORMATION AND FOR 
PROVISION OF PRODUCTION INPUTS TO SMALL-SCALE FARMERS 
  
I. JUSTIFICATION 
1. Liberalization of the Cotton Sector in 1994 under World Bank Structural Adjustment 
Program made cotton marketing free and the farmers were supposed to buy own inputs. With time, cotton being a labour intensive crop requiring a lot of inputs for pest control and the 
farmers being small-holders and poor, they could not afford pesticides and spray pumps on 
open market.  
2. In addition, farmers needed to be guided on correct inputs especially pesticides and 
fertilizers. While liberalization enabled farmers to sell on cash basis, the benefit was short-lived because as they got back to cotton production in large numbers excited by a free market, the crop was devastated by pest attacks, which totally decimated the yields. 
3. Since Government under the liberalization policy got out of input provision to farmers, 
ginners came in as a stopgap measure and offered to provide subsidized pesticide, spray pumps 
and extension in an effort to ensure adequate production for their ginneries.   
4. Concurrently, ginners demanded from Government that cotton production areas in 
Uganda be Zoned for purposes of ensuring that ginners in a given zone invest together in provision of inputs and extension services and competitively share the crop at marketing.  This 
model worked for two (2) years increasing production from a six (6) year stagnation of 100,000 
bales to 160,000 in the first year and 254,000 bales in the second year, thus proving that inputs support coupled with a good price are the engine for increasing farmers’ production and incomes.  
                                                     
 
1 This project was distributed amongst the Development Community by e-mail on 31 August 2007. 
 WT/CFMC/W/27 
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  5. As long as the ginners were funding these activities, farmers were left at their mercy for 
quality, quantity and timely delivery of inputs. Ginners being profit driven, they have formed cartels, which ended up delivering minimally on farmers requirements.  
6. This was evidenced in increased levels of pests, resulting in a drop in yields from 500 Kg 
per acre realized over three years ago to 200 Kg per acre in 2006/07. The price offered to 
farmers was also reduced and remained static purportedly due to the cost of provision of inputs 
to farmers, which was inbuilt in the pricing structure.  Ginners under the cartels offered uniform prices and did not allow for free price competition. 
7. Uganda strongly appeals that we get support for putting up a sustainable mechanism for 
provision of inputs and extension services to small scale farmers to free them from dependence 
on ginners which gags the prices and reduces production. 
8. From studies carried out, this can be done through the “Input Voucher System” which 
would entail holding back an amount equivalent to 2-3 sprays by whoever buys farmers’ cotton and in turn issues them with vouchers.  Such vouchers would be traded in next crop season for inputs through appointed suppliers. This system, which is purely between farmers and the 
private sector, would be closely monitored by Government and Development partners to ensure 
smooth operation. The system works best if farmers are in groups. However, currently cotton farmers are individualist since liberalization dismantled farmer groups under the cooperative arrangements.   
9. The Government program under the National Agriculture Advisory Services (NAADS), 
which is mandated to organize farmers into groups, has not been able to address the specific needs of cotton.  On the other hand, cotton is grown heavily in North, West Nile and the East 
parts of Uganda (about 50% of the country), which are recovering from insurgence and is thus 
the immediate cash income earner being a traditional crop in these areas.  Cotton is a six (6) month cash crop and by tradition prepares the land for follow-on crops especially food crops which addresses food security. 
10. In view of above, it is necessary that a specific program for organizing cotton farmers in 
groups for accessing inputs, extension services, training and marketing be put in place as the 
only sure way of making the Voucher system a success. Thus will free farmers from ginners, 
allow for competition at marketing, raise farmers’ yields and incomes and at the same time ensure food security. 
II. OBJECTIVES 
11. To create a revolving Input Voucher System for farmers’ groups to access inputs, 
extension services and competitive marketing.  
12. Description of main activities: 
(a) Train extension staff on group formation and group management. 
(b) Sensitization of farmers on benefits of forming groups and working together. 
(c) Mobilization and facilitation of farmers for group formation. 
(d) Formation of an apex cotton farmers’ body, which will bring together the 
various cotton farmers’ groups/associations and promote the farmers’ interests. 
(e) Train farmer group members on operation and management of the revolving 
voucher system for acquisition of production.   WT/CFMC/W/27 
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  (f) Establishment of the voucher system for farmers to save part of their income 
during marketing and use it to access production inputs from agro input dealers at the time of production.  
(g) Management and monitoring of operations of the voucher system. 
(h) Identification of suppliers and stockists of inputs required by farmers. 
III. EXPECTED RESULTS 
(a) Cotton farmers’ groups formed at village, sub-county and district levels. 
(b) An apex cotton farmers’ body formed at national level. 
(c) Improved bargaining power of farmers for services and farm-gate prices. 
(d) Improvement in service delivery to cotton farmers and better access to essential 
inputs particularly pesticides, spray pumps and fertilizers. 
(e) Quantitative improvement in cotton production, rural household incomes, 
foreign exchange receipts through export of lint and overall National economy.  
(f) Improvement in crop management and yields. 
(g) Quantitative improvement in overall cotton production. 
IV. DURATION:  the project is expected to cover five years.  
V. PROJECT COSTS 
Year 1 US$    705,000 
Year 2 US$    545,000 
Year 3 US$    155,000 
Year 4 US$    100,000 
Year 5 US$      60,000 
TOTAL US$ 1,565,000 
 
VI. ACTIVITIES TO BE FUNDED 
Training of extension staff on group formation and group 
management US$   60,000 
 
Sensitization of farmers on group formation US$ 100,000 
Mobilization and facilitation of group formation US$ 200,000 
Formation of an apex cotton farmers’ body US$   35,000 
Training farmers on operation and management of the revolving voucher system US$ 100,000 
Establishment of the Input revolving voucher system US$ 700,000 
Identification of suppliers of inputs required by farmers US$   50,000 
Management and monitoring of operations of the System US$ 200,000 
Evaluation of the Project  US$ 120,000 
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  VII. COST SPREAD OVER TH E PROJECT PERIOD 
 
Estimated Cost (US$ ‘000) 
Activity 
Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Total 
Training of extension staff on group 
formation and group management 30 20 10 - - 60 
Sensitization of farmers on group 
formation 40 30 15 15 - 100 
Mobilization and facilitation of group 
formation 60 50 40 30 20 200 
Formation of an apex cotton farmers’ 
body - 35 - - - 35 
Training farmers on operation and 
management of the revolving voucher system 40 20 20 10 10 100 
Establishment of the revolving 
voucher system 400 300 - - - 700 
Identification of suppliers and 
stocking of inputs required by 
farmers 30 10 10 - - 50 
Management and monitoring of 
operations of the voucher system 60 50 40 30 20 200 
Evaluation of the Project 45 30 20 15 10 120 
 
TOTAL 705 545 155 100 60 1,565 
  
VIII.  LOCATION:  all cotton-growing areas in Uganda. 
IX. IMPLEMENTING AGENCY:  Cotton Development Organization . 
X. PARTNERS:  Uganda Ginners’ and Cotton Exporters’ Association;  Agro Input 
Suppliers;  Cotton Farmers’ Groups. 
 
 
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