29 October 2017

Uganda's Surging Coffee Exports

Uganda's coffee industry seems to be recovering from low export volumes in the previous years as the newly planted crops start production amidst declining prices on the international market.

Latest data from the industry regulator, Uganda Coffee Development Authority (UCDA), shows that coffee export volumes increased by 18% to 4.2million 60 kg bags in the 2016/17 season that end on September 30 compared with the previous year citing increased yield from the newly planted crops as well as good flowering and bean development of the crop in central and eastern region.

This is the first time that the country registered the highest coffee export volumes since 1996 when it recorded 4.15million bags.

Consequently, the crop's export earnings increased from US$351million in the 2015/16 season to US$490million last season, representing 40% growth.

UCDA has since 2012 distributed nearly 317,000 coffee seedlings to farmers across the 98 districts that grow the crop, though low productivity, unpredictable weather conditions, inadequate agricultural extension officers, and low use of fertilizer remains a big hindrance to productivity.

The replanting initiative received a major boost in 2013 when the government unveiled the Operation Wealth Creation (OWC) aimed at raising household incomes for poverty eradication and sustainable wealth creation.

"During 2016/17 season, UCDA began the registration of coffee farmers. Starting with Mukono and Buikwe Districts, we have registered 30,085 and 23,119 coffee farmers, respectively," UCDA Executives headed by the Authority's Managing Director, Emmanuel Lyamulemye Niyibigira, said in their annual report.

The authority said the registration of coffee farmers will be rolled out throughout the country as plans are also underway to review the outdated UCDA statute 1991 so as to provide a conducive environment for regulating on farm production in addition to off-farm production.

So far, the draft Coffee Bill 2017 is complete and awaits Parliament debate and cabinet approval.

This new development comes two months after the government pushed back a target of boosting annual production fivefold by a decade saying it has taken longer than thought to introduce initiatives needed to raise production.

The country now expects to reach a target of 20 million bags a year by 2030 instead of 2020, according to the Minister of State for Agriculture, Christopher Kibazanga.

"We discovered that 2020 is too close, but the dream is on to ultimately achieve 20 million bags," he told Bloomberg in an interview.

Uganda exports most of its coffee to the European Union, Sudan, USA, and India, with Robusta coffee accounting for 85% of the total exports.

Latest data from the International Coffee Organisation (ICO) shows that coffee prices have been on the downward trend since August this year stemming from high supply on the international market. Robusta coffee was the most hit with a 5.1% decline in prices as at the end of last month.

Kenya, Tanzania and Rwanda drops

Available data indicates that Kenya, Tanzania and Rwanda registered a sharp drop in their coffee exports citing adverse weather conditions that took a toll on the crop.

Kenya's export volumes dropped by 11.3% to 34.092 metric tonnes for the year ended 2016/17 season, according to the Nairobi Coffee Exchange, citing unfavorable weather conditions across the coffee growing regions.

Tanzania recorded a decline in the coffee export volumes from 1.2million bags to 1.05million bags citing biennial bearing cycle, according to Tanzania Coffee Board.

The Tanzanian government is currently implementing its coffee sector strategic plan whose objective is to double production by 2021.

Similarly, Rwanda saw its coffee export volumes decline from 19,560,636kgs sold in 2015/16 season to 18,502,442kgs last season, indicating a 3.61% drop in earnings, according to the National Agricultural Export Board (NAEB).

Beyond East Africa

Meanwhile, globally, coffee production in 2016/17season is currently estimated at 153.9 million bags, representing a 1.5% increase compared with previous year on the back of high production in Brazil and Colombia.

While Arabica production is up by 10.2% to 97.3 million bags as a result of bumper harvest, Robustas are estimated to be down by 10.6% to 56.6 million bags.

"Despite increases in production while consumption decreased slightly, 2016/17 is seen in deficit for the third consecutive year, with consumption exceeding production by 1.2 million bags," the ICO report says in part.

However, the report notes that the market has remained well supplied by stocks accumulated during surplus years in 2012/13 and 2013/14 seasons, with stocks in importing countries reaching 25.4million bags as at the end of June 2017, their highest level since June 2009, to provide a buffer against any short-term supply concerns.

Brazil's coffee production for 2016/17 season is estimated at 55 million bags, up 9.2% compared to the previous year, due to partial recovery from drought in the preceding two years, particularly for Arabica.

Similarly, Colombia ended the 2016/17 season with a total production of 14.5 million bags, its highest volume since 1992/93 season and the fifth consecutive season of growth.

Exports from Colombia rebounded by 9.6% to 12.4 million bags in the first eleven months of the 2016/17 season, following an unusually low volume of shipments due to a truck drivers' strike in the previous season.

However, production in Vietnam, another world's leading coffee production, declined by 11.3% to 25.5 million bags due to dry weather at the beginning of the year followed by rains during harvesting.

Performance of Uganda's coffee export volumes and earnings in the past seven years

Year 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17

Volume (60-kg bag in million) 2.77 3.14 3.36 3.65 3.24 3.56 4.2

Value (US$ millions)

371 467 422 403 403 352 490

Source: UCDA

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