The Independent (Kampala)

Uganda: Coffee to the Rescue

In the 1990s, Gerald Ssendaula, the former finance minister, had 100 acres of coffee before the coffee wilt disease reduced them to nothing. He did not lose hope. He is back to a crop, which he says puts bread on his table. Currently, he has up to 40 acres and targets more.

"Farmers had lost hope when coffee wilt hit this country in the 1990s but are now getting back to it," says Ssendaula. Under normal circumstances, an acre of land will accommodate at least 500 seedlings. In a good season, according to players, each plant will yield a minimum of three kilograms of Kiboko coffee. The crop is harvested twice a year.

Going by the current price of Kiboko coffee on the market (between Shs 1, 700-Shs 2,000), an acre of coffee would earn a farmer not less than Shs 4 million a year from the two seasons. This is higher than what most crops can fetch in the same period other factors constant. Assuming Ssendaula harvested all his 40 acres at a go, he would earn a gross of over Shs 60 million a year. Ssendaula, who is also the chairman National Union of Coffee Agribusiness and Farm Enterprises (NUCAFE), an organization that brings together over 600, 000 coffee farmers countrywide, sees a great potential in the crop to lift people out of poverty.

Optimistic economic experts:

A brief report, titled, 'The Potential of Coffee to Uplift People out of Poverty in Northern Uganda,' which was compiled by the Economic Policy Research Centre at Makerere University, was on June 4 released in Kampala. The report shows that generally, Northern Uganda coffee-producing households are relatively better off economically compared to non-coffee producing households.

The EPRC study focused on Northern Uganda because at 46%, it has the highest poverty incidence compared to 11%, 22% and 24% in the Central, Western and Eastern regions respectively (Ubos, 2010).

The key objectives of the survey were; to examine the contribution of coffee production towards poverty reduction in Northern Uganda and to analyse the implications of coffee expansion in the mid-North to the national economy.

The survey covered the districts of Gulu, Nwoya, Lira and Apac.

Swaibu Mbowa (PhD), a senior research fellow at EPRC, said in any of the 100 households sampled, the majority were doing better economically than those involved in any other farming activity.

For instance, Mbowa said, poverty incidence levels of coffee-producing households were lower at 21.7% compared to 31.6% of non-coffee producers.

About nine in ten of the households that can afford three meals a day are coffee producers, whereas the 39% who cannot afford are non-coffee producers.

This finding is in line with a Uganda Bureau of Statistics (UBOS) study of 2009/2010, which found that 56% of Ugandans who can afford three meals a day are coffee households while 52% who cannot afford are non-coffee growers.

The EPRC report says the introduction of coffee in mid-north was a key milestone by government in promoting priority crops earmarked by Ministry of Agriculture, Animal Industry and Fisheries.

The sub-region has 14 districts with 15,887 households growing coffee with capacity of 154 metric tonnes as of December 2013.

The study identified the major challenges in the region as price fluctuations, drought which affects yields, marketing and knowledge gaps among others.

It recommends that government should intensify the coffee expansion program in the sub-region to leverage the poverty reducing effect of coffee, close knowledge gaps (extension), mitigate effects of prolonged drought and focus on developing processing infrastructure for value addition.

Nationwide picture:

Speaking at the launch of the report, Sunday Mutabazi, a commissioner in the ministry of agriculture, said Ugandan farmers have over the years been earning big from the crop "which everyone should get involved in" because the earning from the crop has kept rising in recent years.

For instance according to Mutabazi, Ugandan farmers earned Shs 950 billion in 2011, Shs 810 billion in 2012 and Shs 910 billion in 2013. Uganda Coffee Development Authority estimates about 1.3 million households to be coffee growers in the country.

The government has set a Shs 108 billion plan to plant 300 million coffee trees by 2016 to further tighten its position in the coffee sector.

Also, the government is on course to implement the National Coffee Policy, which is now guiding the sub-sector in areas of production and marketing to benefit farmers and the economy in general. What remains to be seen is whether there will be actual implementation going forward.

"It is among the top ten priority crops which government thinks will fight poverty among the population," he said.

Official figures show that Uganda currently produces 2-3 million 60- kg bags of coffee every year compared to the world's top producing giants like Brazil with 42 million, Vietnam 15 million, Colombia 11 million and Ethiopia 6.5 million. Uganda is among the top ten producers in the world and second in Africa after Ethiopia. It is the world's fourth largest robusta producer. However, only 3% of the country's total production is consumed locally.

The crop is the major foreign exchange earner and has been contributing an annual average of 20% of Uganda's total export revenue for the last ten years.

UCDA current monthly report for the coffee year 2013/14 indicates that 36,676-kilo bags of coffee worth $41.07 million were exported in April 2014 at an average weighted price of $2.03 per kilo.

Farm-gate prices for the common Robusta Kiboko averaged Shs 1,700.

On a year to year basis, coffee exports for the period (May 2013 -April 2014) totaled 3.85 million bags worth $426 million compared to 3.13 million bags worth $404 million in the same period last year (May 2012 -April 2013). This was a 23% and 5.2% increase in volume and value respectively.

The report further shows that 74.2% of the total export volume was exported by 10 exporters out of 33 exporters that performed in the month. Some of the exporters include Ugacof (U) Ltd, which held the highest market share of 18.16%, Kyagalanyi Coffee Ltd- 11%, Olam (U) Ltd at 9.13%, Kawacom (U) Ltd at 7.99% and Ibero (U) Ltd at 6.14% among others.

Exports to European Union countries totaled 239,493 bags accounting for 71.13% of total exports, but implying a reduction of about 5,000 bags in the volume exported to the region in March 2014. It was followed by Sudan with 38,216 bags (11.35%) compared to 44,390 bags (12.74%) and India with 15,277 bags (4.54%) compared to 7,916 bags (2.27%) exported in March 2014 among other smaller markets across the globe.

Compared to the rest of the world, total production for 2013/14 crop year is still estimated at 145.7 million bags, recording a slight increase of 0.2% from 2012/13. Consumption in 2013 is provisionally estimated at 145.8 million bags, a 2.1% increase from 142 million bags in 2012. Most increases were recorded in exporting countries and emerging markets.

Big sector boost:

There are efforts to boost the sector according to UCDA and other sector players.

For instance, a total of 13,085,394 seedlings were planted during the month benefiting 87,220 households and more will be planted in the coming seasons.

Total seedlings planted for the coffee year stands at 24,789,394 seedlings, benefitting 160,829 households. The collaboration between UCDA and the local authorities (LCIIIs and Senior Assistant Secretaries) in supervision of seedling distribution has been very successful in ensuring timeliness, ownership of the process by the local communities and proper accountability.

The current partnership between UCDA and the veterans has also progressed well and nearly all the selected zones have accomplished planting of over five million coffee seedlings.

Questions remain as to why many companies continue to export billions worth of unprocessed beans instead of ready to drink coffee. Analysts say exporting raw beans means lower export earnings, exported employment and high import bills for instant coffee, which are all bad news for the fight against poverty and the balance of payments.

Players say the trend (exporting raw beans) has persisted because of supply side constraints in the local market and the difficulties involved in accessing markets abroad for processed coffee. They thus find it easier to export raw beans, which are on high demand in the foreign markets. The high costs involved in the procurement and importation of machinery and packaging materials, tight tariff barriers in other countries and the poor quality of our coffee have equally failed Uganda in its move to export processed coffee.

Joseph Nkandu, the executive director of NUCAFE, emphasizes the need to enforce value addition, which he says is critical on top of enforcing quality standards beginning with the farmer.

The other challenges that the sector players want to be addressed are infrastructure-related - such as roads, reliable power and rail and the high cost of borrowing from financial institutions.

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