“Middlemen” is a term that often has negative connotations. But Stephen McCarthy, a Chemonics value chain expert, said middlemen have a key role to play in the transformation of agricultural value chains in Uganda.
“In the development world, the term ‘middlemen’ comes with somewhat negative connotations. They have been called ‘coyotes,’ ‘hyenas,’ and ‘predatory rent-seekers,’” said Stephen McCarthy, a Chemonics value chain expert with 35 years of experience.
Mr. McCarthy was a director in Chemonics’ Agriculture and Food Security practice and the former chief of party on the Feed the Future Uganda Commodity Production and Marketing Activity, a Chemonics-implemented program that is taking a fresh approach to boosting the production and marketing of maize, coffee, and beans in Uganda.
Rather than finding ways to work around middlemen while assisting producers and end-buyers, as many donor-funded programs have done, the project is working with this oft-maligned group of value chain actors because they are confident they have a key role to play in the long-term growth of Uganda’s agricultural sector.
The middlemen of Uganda’s maize, coffee, and beans value chains include traders, processors, and village agents (i.e., business owners who aggregate producers’ crops and sell them to traders). In an environment where poor distribution networks frequently lead to market failures, Ugandan traders and village agents often enter value chains only to buy and sell farmers’ output, squeezing farmers’ margins to turn higher profits and mitigate market risk. This has earned traders and their village agents a nasty reputation among Uganda’s farmers and made international development organizations, which tend to be production-oriented, hesitant to work with them.
“Dismissing middlemen outright and thinking that farmers can be directly linked to buyers without some sort of middle, value-added function is generally ill-informed and leads to further market distortions, poor business practices, and decreasing competitiveness. Middle actors in value chains need to be brought in with incentives to drive better business practices based on effective competition and cooperation,” McCarthy said.
Using a facilitative value chain approach, the project is working to lay the foundation for greater collaboration among farmers, village agents, and traders. Because greater collaboration will require genuine changes in attitudes and behaviors, in the activity’s first year, the team focused on building relationships among value chain actors and managing middlemen’s reputation, with some early successes that bode well for the activity.