Watching the presidential candidates sell their ideas to their electorates during the presidential debate the subject of commercialising agriculture came up as a strategy to revamp agriculture in the country. Commercialising agriculture simply put is transforming small-scale survival farming into large-scale farming. The elections are now long gone and we have a president. The big question is, how will he walk the talk? Well, I believe greenhouse farming is among a plethora of ways in which agriculture can be commercialised.
Set up costs
Greenhouse farming is definitely not a new concept but the cost element involved is the debatable issue. In Uganda today, companies retailing greenhouse kits do so at a range of Shs12 m to Shs15m for a kit of eight metres by 15 metres. If you are lucky enough to get hold of a local craftsman, the best you can get is between Shs2.2m to Shs3m for a similar kit, which is a good deal. Well, looking at the figures, the average small scale farmer will definitely not be in a position to set aside this kind of money.
Probably, the average corporate can but again farming on phone has always proved to be a total disaster. The best leverage to greenhouse farming given these set up costs would be the government lending these kits to farmers’ cooperatives with repayment periods of within a year or two given the projected returns for a greenhouse.
Return on investment
Farmers tend to suffer from ‘land mania’ which is the belief that you would need a large of piece of land to practice farming in the first place. The greenhouse concept refutes such thinking. Let us say you sunk up to Shs7.5m in set up and labor costs and planted tomatoes that span 75 days to mature and harvest the crop. You are likely to have about 600 stems of tomatoes each yielding up to 10kgs to 15kgs in its lifespan of four and a half months after the first harvest. Projected revenues at today’s retail price of between Shs. 2,000 and Shs3,000 would be between Shs12m and Shs18m for the plants lifespan.
The retail business is definitely brutal and as such selling to retailers for as low as say Shs1,800 would still make business sense. In such a scenario, you would net Shs3.3m. The beauty is, for the next harvest the incremental costs would be only the seedlings, labor and the pesticides and therefore growing the margins. The expected return on investment would therefore be at most a year of hard work.
Paul Njuguna is a financial and cost accountant. Email:paul@paulnjuguna.com
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