Governance structures in smallholder pig value chains in Uganda: constraints and opportunities for upgrading

What is it about?

Piggery is an important sector in Uganda and a source of livelihood to over 1.1 million households. With an estimated pig population of 3.2 million (that is projected to grow to 8 million by 2020), the pig value chain is dominated by smallholder producers and small and medium enterprises (SMEs) operating under informal businesses. The paper analyses governance structures in Uganda’s smallholder pig value and identifies inclusive models that could enhance integration and competitiveness of these SMEs. Using the New Institutional Economics framework, the study utilized cross-sectional and survey data from randomly selected value chain actors in four districts. The findings show that most of the live pig traders are vertically integrated, performing several functions in the value chain like transportation, pig slaughter and pork retail under single ownership. Pig farmers are largely concentrated at the production node which is largely characterized by spot markets and informal relationships. This level of integration of the traders is positively influenced by access to market information at the retail node, value of investment in the chain and dedicated asset specificity in terms of backyard slaughter premises. Traders therefore pursue higher integration levels in order to increase their control over supply uncertainties brought about by price fluctuations due to outbreaks of diseases such as African Swine Fever. The main conclusion of the study is that there is need to promote business models that require horizontal integration of producers into collectives to improve their bargaining power for better terms of trade and lower transaction costs relating to transportation due to economies of scale. The researchers further highlight the investment opportunities that exist such as in setting up appropriate pig slaughter facilities through private or public-private partnerships, and the role that government ought to play by providing a favourable business environment to incentivize the private sector to invest in the pig value chain.

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Why is it important?

Value chain governance in the pig sector is pivotal especially for small and medium enterprises (SMEs), for better integration and coordination of their activities and improved performance. There are risks that as value chains develop and get more organised in order to meet the changing patterns in consumer demand, SMEs may be left out. This is largely due to the asymmetric power relationships in the value chain that impact on the distribution of costs and benefits in the chain.

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