How an agricultural business can benefit from the Oil and Gas Value Chain

Shiloh Farms Uganda Ltd, an agribusiness company is  engaged in developing agriculture projects, mechanizing on-farm activities, agriculture supplies and training. Our products include; agriculture plans, farm establishment services, mechanization services, and training in agriculture standards and compliance. We also bulk high-quality agriculture produce and offer catering services. 

We deliver these services to individuals engaged in farming and those who would like to invest in agriculture but are constrained by expertise and time. We also work with communities through Government projects like the Agriculture Cluster Development Project of the Ministry of Agriculture Animal Industry and Fisheries (MAAIF).

What is your level of participation in the Oil and Gas Value Chain? 

 Our participation is in the area of food production, supply and delivery. 

We know that workers in the Oil and Gas industry will need to feed every day. The Petroleum Authority of Uganda (PAU) indicates that over 160,000 people will work in the oil fields, and these will be followed by over 1,000,000 people. All these people will need to feed. And unlike what we are used to in this country, the food that these people will eat must meet specific standards. 

Therefore, as a company and as host communities in the oil region, we have a crucial role in producing the required food, supplying it following the standards needed, and then delivering it as catering companies in a compliant way.

Together with other partner companies, we are preparing ourselves to meet the anticipated growth in the market. Preparations include; building internal capabilities like hiring the appropriate human resource, skilling in quality, health and safety standards, food safety standards, sustainable production systems and compliance issues. We have also engaged farmers within communities to forge collaborations since it is impossible to do this alone. We advise them on what to grow and how to grow it, focusing on consistency in quality, quantity and supply that meet the required standards. For example, if one is interested in supplying eggs. They need knowledge of the number of birds necessary to consistently produce a certain number of eggs per day. They also need a feeding plan that will enable them to deliver quality and consistency. We support the farmers in this planning and execution process, hoping that some will be our future suppliers. 

 What opportunities does the Oil and Gas Value Chain present for SMEs?  

There are several opportunities for SMEs, especially in the agriculture and food space.

First, it is essential to note that the Government has a ring-fenced supply of food items to Ugandan companies. The caveat is that “if the Ugandan companies can meet the requirements for quality, volumes and consistency”. If they can’t meet those, then suppliers of food to oil companies will import. Imagine importing beans, maize flour, rice, tomatoes and onions to Uganda. The market is there, the need is there, and Uganda has the potential. But these Oil and Gas workers are not going to eat potential. They need food. So we must organize ourselves and execute while the opportunity is still open to us. 

Opportunities for SMEs cut across the value chain from food production, processing and delivery. There are opportunities for input suppliers, extension services providers, farm services providers, producers of crops and livestock. Mechanization services are critical because they offer efficient and cost-effective options for farmers. It is cheaper to hire efficient weed and pest management services than to buy spray equipment and accompanying specialized labour, given the fact that a farmer will use them only a few times in the year. I advise young people to get organized and offer spraying, weed management, planting and harvesting services to farmers.  

Other opportunities include storage, handling, transportation, processing, packaging, and delivery like catering. SMEs can also offer human resources, accounting, and financial management services to support agribusinesses. When businesses use these outsourced services, they can reduce their overhead costs while accessing high-quality professional assistance. 

 How is your company positioned to take up the available opportunities? 

 We are making preparations, and these started some years ago when we joined the Stanbic Business Incubator program. 

Today, we are implementing activities based on the capabilities we acquired and partnerships established during the program. For example, I had always wanted to offer catering services, but I had no clue how to start. During the incubator training, we met with some colleagues who were already in the catering business. They helped us start our own catering business. Some have helped us in operation safety and health. The catering service is growing, and we are ready to offer the service when Oil and Gas production activities start.

Secondly, we partner with the Stanbic Business Incubator program to offer training to other SMEs in standards and compliance. We are also building more partnerships to enable us to improve our capabilities. For example, we approached one of the leading financial consulting firms – Acclaim Africa, to help us with governance issues. Despite the delays brought on by Covid19, we expect to soon formalize a relationship and benefit from the great products they have tailored for SMEs. 

Through participation in events, accessing bulletins and staying close to organizations like the Petroleum Authority of Uganda (PAU), Uganda National Oil Company (UNOC), Uganda Chamber of Mines and Petroleum (UCMP) and the international oil companies, to keep abreast with developments in the sector. We are listed on the national supplier database compiled by PAU, which offers many networking opportunities.  

We are working on obtaining international certifications, and in the long run, qualifying to offer auditing services for international standards in food safety. We are also proactively raising awareness in various fora about the looming opportunities and what it will take to access them. These activities have positioned the company to embrace the opportunities available in the sector.

 What challenges are SMEs facing to participate in the Oil and Gas Value Chain? 

The major challenge SMEs face is building internal capabilities and capacity to meaningfully participate in this space.

It requires awareness and adequate resources to identify the gaps and implement measures to resolve them. Secondly, SMEs are used to working on their own, and because they are small, they are unable to take on assignments of such a scale as presented in the Oil and Gas sector. The solution is to collaborate and form joint ventures, which is relatively new in Uganda.

When it comes to acquiring international certifications and going through the process before certification, management appreciation and commitment of resources are required. SMEs need to realize this – which the Oil and Gas industry is like an express-way where only the qualified are allowed to drive. 

What can be done to increase the SMEs’ participation in the Oil and Gas Value Chain?

 Government has put in place the necessary policies and enabling environment for SMEs to meaningfully participate in the Oil and Gas space. 

What needs to be done is to increase awareness and catalyze platforms and fora for SME engagement. This will enable them to identify the opportunities and prepare for them. The Petroleum Authority of Uganda (PAU), international oil companies and other stakeholders should continue to organize periodic dialogues and publications that inform SMEs about the sector developments. This information is critical for SMEs to make informed business decisions. 

SMEs need to understand that they cannot do it alone. They need strategic alliances, partnerships, and joint ventures to help them participate more meaningfully in the Oil and Gas sector. 

Finally, we hope that with the existing enabling environment, preparation, resources – if available, and strong partnerships in place, SMEs’ participation will be evident across the different Oil and Gas Value Chain segments.