28 February 2018

Uganda: Coffee's Future in Dilemma

Photo: Daily Monitor
A farmer picks coffee beans (file photo).

Uganda is currently implementing an ambitious plan the coffee road map to increase coffee output from the current 4.5 million bags to 20 million bags by 2025.

This new target is higher than the approximately 16 million bags that countries in Africa combined produce per annum at the moment, a move that would place Uganda among the top three coffee producers in the world - Vietnam and Brazil and create more than 500, 000 new jobs.

It would also increase Uganda's export earnings from the commodity from over US$500 million recorded in FY2016/2017 to around $2.2bn per year, attract financ- ing to the industry to the tune of $1.3bn and improve household livelihood by Shs 1.5million per annum.

But can the target be met at the time some farmers are reducing their land under coffee as a result of low coffee prices? This, among others, were the issues discussed during the 16th African Fine Coffee Conference and Exhibition, organized by Uganda Coffee Development Authority (UCDA) together with African Fine Coffees Association (AFCA) and Agribusiness Business Initiative (aBi) at the Kampala Serena Hotel from Feb 14-16 under the theme; 'Sustainable coffee industry for social economic transformation'.

Nathan Nandala Mafabi, the Member of Parliament for Budadiri County West and chairperson for Bugisu Cooperative Union (BCU) limited, which has over 270 Cooperative Societies engaging in coffee value chain, said farmers are currently demoralized by low prices which they are offered by multi-national corporations and are thus reluctant to increase coffee production.

He said many farmers have cut on their time for coffee activities and apportioned it to other crops like grains where they are assured of good returns in a short time.

"Some farmers sell their coffee at low price before it even flowers," he said, adding that they do that because they are poor and have to meet costs for daily needs.

Mafabi said government needs to intervene and support farmers especially in the area of marketing their output.

Joseph Nkandu, the executive director of the National Union of Coffee Agri- business and Farm Enterprises (Nucafe) that has over 1 million farmers told The Independent on the sidelines of the conference that if government is serious about increasing productivity in coffee, the farmer, who is the primary producer of coffee, has to be supported in terms of credit and extension services, organizing them in groups, access to water for production, training and making sure that they add value to their coffee for margins to increase. "... and when margins increase, the farmer will earn more and invest in the quality of coffee and acreage to increase productivity," Nkandu said.

He said the farmers also need to increase the number of trees planted in an acre from the current 450 trees to over 1000.

This, he said, can be complemented by using genuine fertilizers which boost soil nutrients and drive up output. He said some farmers have witnessed an increase in earnings per acre by over 50% since they started using fertilizers three years ago.

On coffee consumption, Nkandu said demand is growing in Uganda as evidenced by the mushrooming coffee shops over 50 shops are operational to date compared to a few 10 years ago. "The best we have in this country where there is no gamble is coffee; invest there and have patience," he said.

He added that government needs to do awareness programs in partnership with the private sector and other players to people to increase coffee consumption and production. "What we need to do is; let us invest in quality, brand and package our coffee so well and the sky will be the limit," he said.

Fred Kawuma, the secretary general at Inter-African Coffee Organization (IACO) said there is need to address issues in the value chain to place our coffee successfully in the market.

He said as new investors come to Uganda to join efforts geared towards value addition, raw beans can still be exported along- side small volumes of roasted coffee to keep Uganda's coffee on the international market.

He said that liberalization of the coffee market particularly in Uganda has seen international coffee players who are primar- ily interested in unprocessed coffee take centre stage in the trade because they sign contracts with roasters in developed countries to supply them with the raw materials.

This, he said, is because local entrepreneurs do not have capacity to process all the coffee being produced and sells it on the global market as a finished product. "That is where key interventions are required," he said.

This development comes at the time Uganda's coffee industry is facing a number of challenges related to quality, limited access to credit by farmers and value addition, limited access to land, ageing trees and farmers, price fluctuation, pests and diseases, poor markets as well as negative perception on coffee growing by youth and women.

It also coincides with a number of coffee producing countries including Ethio- pia, Brazil, Honduras, Vietnam, Colombia, Guatemala, Mexico, India, China, laying down strategies to increase coffee production, a move experts say, will continue weighing prices of local coffee exports on the international market amidst low con- sumption locally.

The good thing, is key players like, Ishak Lukenge, the AFCA board chairman, argue that there is a lot of government goodwill to support the coffee sector citing the imple- mentation of the coffee roadmap which is underway.

"We need to develop the culture of consumption in most African countries," he said during an interview with The Independent. Lukenge said that the Continental Free Trade Area (CFTA) set to be signed in March 2018 by 55 African countries, is good news because it would provide an alternative market for coffee at zero or small tax.

CFTA will become the second largest bloc to the World Trade Organization (WTO) that was signed in 1994. The CFTA will be a market of about 1.3 billion people currently and is expected to be about 2 billion by 2025.

Moses Ali, the first deputy prime minister and deputy leader of government business in Parliament, said the Uganda government is committed to implementing the coffee roadmap through strengthening the policy and regulatory framework focusing on among others, value addition, research in new varieties, pests and diseases control, youth and women engagement and offering seedlings through government programs like Operation Wealth Creation.

Quick facts about coffee

Coffee is the second most traded commodity in the world

It contributes 20-30% to Uganda's foreign exchange earnings

In 2016/2017 Uganda exported about 4.6 million 60-kg bags of coffee (earned slightly over $500 million) - which was higher than 3.5 million bags that were exported three years ago per year.

October 2014; President Museveni issued a directive to Prime Minister to accelerate coffee production from 3 million to 20 million bags by 2020-2015.

December 2015; UCDA and the PM convened a stakeholders' meeting in which an agenda for a Coffee Lab was agreed upon.

March 2017: Coffee Lab held culminating into a Coffee Roadmap a transformative agenda for the Coffee Sub sector.

April 2017: Museveni launched the Coffee Roadmap


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