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Elevating Raw Cotton to Value-Added Commodities

Edwin Mwesigye, CEO, Mutuma Commercial Agencies (MCAL), talks to World Business Journal about the company’s adaptability in diversifying its production lines as it looks to 2025 and beyond by expanding with value-additive cotton products.

Can you provide an overview of Mutuma Commercial Agencies (MCAL)?

MCAL is one of the leading producers in Uganda, specializing in high-quality hospital cotton wool for medical purposes. Additionally, MCAL offers a full range of other products, including vegetable oil, cottonseed cake for animal feed, cotton husks for mushroom cultivation, and soap stock for soap production. The company employs 230 individuals and has established further collaboration with approximately 6000 farmers, with the majority of them being smallholder farmers.

What is the current capacity of the ginnery factory and how has the partnership with Uganda Development Corporation (UDC) impacted your operations?

Our ginnery factory has the capacity to produce about 20,000 bales each season, but currently, we produce around 5000 bales per season. The reason for the reduced output is the limited availability of cotton in the country. UDC has been a valuable partner, providing us with working capital and holding a 36% stake in the ginnery.

Who are your main clients, and how do you meet their specific needs? Are there any government programmes that have influenced your product offerings?

Our primary client is National Medical Stores (NMS), to which we supply cotton for medical purposes. NMS is the governmental body that has a statutory mandate for warehousing and distributing essential medicines and health supplies within Uganda.

The government has encouraged the Buy Uganda Build Uganda (BUBU) policy to reduce the reliance on imports and also, to promote local production. The BUBU policy has affected us positively, as much of the cotton that is currently being imported is of sub-standard quality.

What key factors have enabled MCAL’s diversification into various production lines, and how has this impacted the company’s growth and its relationships with local farmers?

The diversification into various production lines can be attributed to our commitment to adapt to changing market dynamics and our mission to reduce dependency on any single product line. Diversification has allowed us to tap into multiple revenue streams and mitigate risks associated with fluctuations in specific markets. Our close relationship with local farmers is a critical aspect of this strategy.

By procuring conventional cottonseed from over 6000 farmers, we not only ensure a consistent supply of raw materials, but also contribute to local agricultural development. This partnership supports smallholder farmers, as they have a reliable buyer for their cotton produce. The impact of diversification on our growth is significant, as it has helped us create more employment opportunities, supporting local communities and the economy. Furthermore, it positions us as a versatile and resilient player in the agricultural and manufacturing sectors within Uganda. Our strategy has been to adapt and expand, ensuring our long-term sustainability and contributing to the prosperity within the regions in which we operate.

What is the main challenge you face in the cotton industry?

The main challenge within the subsector is access to capital. The capital that is made available from commercial banks often makes little business sense for us. We require so-called ‘patient capital’, especially in the agriculture sector, to address this issue.

Do you have any plans to extend the factory’s capacity or diversify your product range in the near future?

Yes, we have plans to expand our factory. We intend to venture into value addition by producing cotton yarn in addition to cotton wool in the best-case scenario by 2025. Our long-term vision is to add value to the entire cotton production process and reduce the export of raw cotton.

What is your message to potential investors looking at the cotton subsector in Uganda?

The message that I would give, is as follows: If you are considering investing in the cotton subsector in Uganda, I would advise focusing on value addition rather than primary production. There is a market for value-added cotton products, and it can significantly benefit both the industry and local farmers. By investing in value addition, you can achieve higher prices for cotton and contribute to the growth and stability of the subsector.

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