Uganda: Tanzania Farmers State Reasons for Selling Coffee in Uganda

Dar/Kagera — Coffee from the Kagera Region is reportedly being smuggled into Uganda, with the farmers saying low prices and nuisance taxes in Tanzania being their main disincentives.

By selling their coffee in Uganda, Tanzanian farmers in Kagera Region get between Sh1,700 and Sh1,800 a kilo, compared to the Sh1,000-1,100 they earn from selling the produce locally.

Uganda exported more than six million bags of coffee in 2020/21, the highest annual total in 30 years.

The country earned $559 million from coffee exports during the financial year to June 30, 2021, up from $496 million recorded in 2019/20.

The amount is almost the same as the $578.4 million that Tanzania earned by exporting all its traditional crops of coffee, cashew nuts, cotton, tobacco, tea, sisal and cloves during the 2020/21 financial year.

Tanzanian coffee farmers say that, apart from price, the regulatory frameworks in the neighbouring country don't have multiple taxes for growers.

But, Agriculture minister Adolf Mkenda said the country's concern was to enable farmers to get better prices from their agricultural produce - and this can be realised through strengthened cooperative unions.

"Cooperative unions should be supported, encouraged and assisted to buy and sell produce at the world market instead of remaining with the coordination roles," he said in a telephone interview.

Speaking to The Citizen, a farmer in Karagwe District, Mr Sospeter Philipo, said farmers get low benefits from prices offered in the local market, triggering smuggling to neighbouring countries.

"Uganda and Kenya offer better prices, and don't tax farmers after they have sold their agricultural produce," he said.

The Karagwe and Kyerwa District Cooperative Union (KDCU) manager, Mr Oscar Dominick, said coffee smugglers are unlicensed traders and middlemen who evade tax.

He said Uganda and Kenya are the destinations for smuggled coffee from Karagwe and Kyerwa, resulting in huge public revenue losses.

"The government should hold meetings with coffee farmers and middlemen to discuss better ways of boosting coffee production, and eliminate smuggling to neighbouring countries," he said.

A Kagera regional coffee board member, Mr Jimmy Mchau, said 78,515 tonnes of coffee pods were collected and sold in the 2019/2020 season, higher than the 48,000 tonnes up to October 2021. The government should devise measures that would increase coffee production, surmount smuggling and encourage domestic trading.

"Better prices would discourage smuggling and encourage domestic trade through cooperative unions in coffee-growing areas," he said.

But, Mr Mkenda said the Business Blueprint directs the scrapping of nuisance levies hindering prosperity of crops business that in turn encourage smuggling.

"Categorically, I would say we are strengthening cooperatives to enable them to export products to world markets," he said.

He said farmers lose a lot by selling agricultural crops to middlemen who trade them at the global market, saying this is a major challenge for other crops, including cashews.

Cooperatives should emulate the Kahama Cooperative Union (Kacu) on trading at the world market.

"Last time, Kacu procured cotton at Sh1,050 a kilo as indicated by the government. But, it made extra payment to farmers after selling the produce at the world market - thus making farmers to receive over Sh1,700 per kilo. As a result, cotton from Kishapu and other areas outside Shinyanga was taken for sale to Kacu," he said.

Buying and selling crops at global markets is what veteran cooperative unions like the Kilimanjaro Native Cooperative Union (KNCU) did during which farmers were very comfortable, he said.

"Therefore, we are supposed to ensure cooperatives are empowered, have integrity and are encouraged to emulate the performance of Kacu," he said.

Prof Mkenda said most price concerns were caused by individuality of farmers, encouraging them to work in cooperatives.

According to them, the government had no ill intention with cooperatives following measures taken against embezzler cooperative leaders, saying it aims to reform the cooperatives.

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