Dorothy Nakaweesi
4 November 2009
Kampala — Many times coffee producers and traders are caught unaware by the volatility in international prices which leads them into making losses and being less competitive. This can be avoided, if the traders were equipped with knowledge and techniques in price risk management efficiency in times of crisis.
Being a vital cash commodity to East Africa, where in Uganda alone over a million households rely on coffee, the World Bank through its Agriculture and Rural Development, has introduced a Commodity Risk Management course to equip and train coffee traders and producers on how to handle the situation in times of volatile prices.
To benefit from this course facility, are the Eastern African Fine Coffee Association, eleven member countries. Funding has been secured from the European Union's Africa Caribbean Pacific (ACP) Agricultural Commodities Programme and the United States Agency for International Development (USAid.
In an interview with Daily Monitor after the pass-out of 15 master trainers at the EAFCA Secretariat in Kampala, Mr Roy Parizat, the World Bank's Consultant-CRMG said: "There is a gap as far as risk management is concerned in this region. Courses like this are very vital. A few producers know about this and they need to train in order to manage their businesses." He said they have come up with a five-module course to enable small and medium coffee traders to learn how to improve risk management of their coffee businesses. Through this, they will be able to minimise price losses and compete favourably with other international traders.
Mr Parizat said the three EAFCA master trainers, will pass on the skills to help the small and medium coffee traders and cooperatives to compete better effectively so that they are not exposed to volatile pricing and don't go burst when prices move against them.
The course was designed by the World Bank's Commodity Risk Management Group (CRMG). The trainers will equip dealers with effective monitoring of risky positions throughout a season, understanding the range of risk management strategies that can be utilised for controlling and mitigating risk on dynamic basis and identifying opportunities to effectively manage price risk.
In his remarks, EAFCA Chairman, Mr Leslie Omari said: "The course is very important and we hope the sponsors will be able to fund more courses and this should not stop at coffee alone but be extended to other commodities too."
He added the since most the coffee traders and producers are not educated, this training will unveil a special education for them. "EAFCA's objective is to produce and process quality coffee and one would be very careful if there are risks involved," he added.
EAFCA has eleven member countries, ten of which are producers, with South Africa as the trading partner. The countries include Kenya, Rwanda, Tanzania, Ethiopia, Zambia, Zimbabwe, and Malawi.
Out of the total global coffee production of 126 million bags, the EAFCA region produces 17 million, with Uganda contributing 3 million bags. Ethiopia consumes 50 percent of its total production, but in Uganda and other countries, consumption is below 2 per cent.
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