New Vision (Kampala)

15 November 2012

Uganda: Coffee Has Added Value to Kimbugwe's Life

His start in 2002 was not extraordinary, but a simple one. He traversed villages buying processed coffee from farmers in Luwero and Masaka districts, which he would later sell and earn nominal profit.

Seated in his offi ce and clad in a black checkered shirt, David Kimbugwe, 33, has a different and yet flowery tale to tell today. With a fl ickering smile that keeps strutting across his face, it is undeniable that

Kimbugwe has reaped big from buying and processing coffee. Having pegged his business on determination and hard work, he has evolved from a village coffee buyer to a factory owner - he is the owner of Bulema Coffee Factory in Kasana, Luwero town council.

"I rent the premises at sh3.5m per year, but the machines are mine. On average I process about fi ve tonnes per day of coffee in a good season. I have bought my land and plans are underway to build my own premises," he explains.

Positive influence:

When he completed Senior Six, Kimbugwe got immersed into the coffee business upon the infl uence of a white man, who used to buy coffee from his parents.

"He bought land to plant coffee at a time when the prices were low. When I asked whether he was aware that prices were low, he said they would shoot up by the time of harvesting. He encouraged me to venture into coffee as a business," he recalls.

With that advice tucked up his sleeves, he started off buying coffee from a group of about 30 farmers. At the same time, he was also working in his parents' coffee factory, where he earned sh400,000 per month.

"Owing to my parents' coffee business background, I knew several farmers. So they would give me their coffee on credit and I would pay them after selling it.

I would collect between one and two tonnes, sell and reinvest," he recalls. Saving the profi ts and pursuing the right priorities, Kimbugwe rekindled the pulse of his business, enabling him to buy a hulling machine.

"I bought it at sh25m. It was a good investment. In a short time I had started earning profi ts," he says, adding: "In the fi rst season, I made sh28m and after that season, I transferred the machines to Masaka for the season and made sh25m."

Even with such earnings, Kimbugwe says the profi ts at the time of his start were not as juicy as they are today. "When I was starting out, a kilogramme of processed coffee (kasse) cost about sh1,400, now it goes for sh4,800," he says.

"If the farmers leave me with the husks, I hull at sh80 and if they take them, I hull at sh120 as the case in Masaka. I sell a bag of husks at sh3,000," he says.

Processed coffee, last season cost sh4,500 and sh5,000 per kilogramme in Luwero and Masaka, respectively. The sharp rise in the prices, according to Kimbugwe, has resulted from a steady increase in demand for Uganda's coffee over the years.

"The European market consumes about 50% of our coffee, USA 20% and Sudan 8%," he explains.

Why others have failed:

Coffee, has changed Kimbugwe's life a lot. He has not only built his dream house of three bedrooms on Entebbe Road, but has made contacts and got exposure to fi nancial institutions for credit.

He observes that most farmers do not succeed because they lack the discipline to manage loans. Kimbugwe advises that loans can best be managed if they are secured and utilised for a single season and then paid back.

"Attempting to use the money beyond the season for which it was borrowed is dangerous," he warns, emphasising that, one should get a loan for one commodity, for instance, either coffee or maize. Getting a loan to invest in both may be too diffi cult to handle.

USAID-LEAD comes in:

"I had a small catchment area, now I have more farmers due to training and exposure by USAID-LEAD," he says. The USAID-LEAD project aims at increasing incomes and reduce the poverty in smallholder farmers by expanding their active participation in market channels for coffee, maize and beans that provide market information, technical support and attractive prices for better quality products.

The project also expects to generate similar benefi ts for smallholders by improving farmers' access to agro-input dealers who provide product knowledge and reliable good quality inputs that increase farmers' yields, lower costs of production and make them attractive suppliers of maize and coffee.

"I am now aware of the parameters of coffee and can easily determine its moisture content, for instance, 16 or 18. I bought a moisture-metre, which I now use to measure the moisture content and work towards keeping it lower, below 14, which is the recommended content level," he says.

If the moisture content is above 14, it becomes costly to take it to driers to score the 14 mark, affecting the farmers' profits.

To support the USAIDLEAD intervention, Kimbugwe advises that Uganda Coffee Development Authority (UCDA), which is in charge of coffee quality control, moves beyond processors to focus on farmers as well.

Farmers, he argues, are the starting point of ensuring quality coffee. How they handle it during harvesting and drying matters.

"The quality of coffee dried on tarpaulins will defi nitely be different from one the dried on the bare ground," he says. Farmer groups that have undergone training through USAID-LEAD now have better prices, for instance, sh200 ahead of non-trained farmers.

Additionally, the organization has acted as a bridge between the farmers and buyers, with Kimbugwe as the main contact person.

Subsequently, more farmers are eager to join us and learn quality coffee harvesting, handling and drying. For instance, Kakinzi- Ngogolo farmers' organization have been trained by Kimbugwe and the members attest to the ensuing benefi ts of better coffee handling.

"Initially, we never sold processed coffee; we only sold kiboko (unprocessed), thus low prices. But when we got training, we realised the need to get organised. We formed groups of 25-30 farmers," says the organisation's manager, William Ssekanjako.

It is at this point, according to Ssekanjako, that Kimbugwe became more useful to the organisation. "He processes our coffee on credit. We sell it in Kampala, put the money into the account through which the farmers get it and then pay Kimbugwe," he explains

The organisation has a hand-huller, which they use to test the output of their coffee before moving to the factory so they don't get cheated. Bukusu village LC1 chairman Edward Kirange, an individual coffee and maize farmer and USAID-LEAD benefi ciary, is a sad man.

He reaped 50 bags of maize from 10 acres last season, which was below his expectations. In a good season, Kirange says an acre gives him about 1,500kg (15 bags).

Currently, a kilogramme costs sh500 and he projects about 1,200kg per acre this season. "I have used my profi ts to buy land and educate my children. I have also bought cows. I now have six local breed cows," he says.

Specifi cally on the side of coffee, Kirange says he has shared the USAID-LEAD knowledge with the farmers from whom he buys coffee and their quality of coffee has improved due to better handling and drying.

Challenges:

Unhealthy competition due to power theft is one of the challenges coffee processors face. As a result, Kimbugwe argues, those who steal power have lower hulling charges to the disadvantage of those who do not steal.

"For instance, they charge sh70 instead of sh80," he says. Kimbugwe notes that another challenge is increasing the weight of coffee falsely "Mixing coffee with other. impurities such as husks and stones to create false weights is a common practice."

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