What are coffee’s chances as one of the seven products government seeks to promote?

The recent developments in the coffee industry in Uganda have raised debate on whether the promotion and exportation of the cash crop is headed in the right direction. From Uganda’s two-year suspension of International Coffee Organization (ICO) membership to trade deals being handed to questionable investors have cast a spotlight on the sector. 

Therefore, the latest strategy by the government to increase the market and expand the export base of seven key products, coffee inclusive, should be able to tackle some of the matters stakeholders raise and thereby change the fortunes of coffee farmers across the country and ensure that the crop boosts economic growth.

The crop is largely grown in the country by more than 1.7 million smallholder farmers. And over the years, it has contributed immensely to the economy, irrespective of the shortfalls. In Africa, Uganda is one of the leading exporters of coffee and the seventh in the world after Brazil and Vietnam.

The country mainly has two types of coffee; Robusta, which takes more than 80 per cent of the market, while Arabica takes the remaining 20 per cent share. Robusta mainly grows in the Lake Victoria Basin, while Arabica is in the Mt Elgon region. 

Despite the outbreak of the Covid-19 pandemic two years ago, coffee exports still performed well. According to Uganda Coffee Development Authority, farmers exported 6.49 million 60 kg bags of coffee for the 2020/2021 season compared to 5.36 million 60 kg bags in the 2019/2020 season. 

The farmers also earned $629.8 million in 2020/2021 coffee season (October –September), recording a 23% growth in earnings up from the $512.22 million in the previous year. Furthermore, the 6 million plus coffee bags exported in the financial year 2020-2021 was the highest annual total in 30 years. 

While these statistics are impressive, the government continues to battle challenges related to promotion, value addition, exportation, and quality, among others, which have in some ways divided stakeholders. 

Farmers have in the past raised complaints of exploitation by middleman, lack of access to markets, among other concerns, but with the enactment of the National Coffee Act 2021, the government seeks to ensure that farmers are rewarded handsomely for their labour. The law seeks to facilitate development of a competitive, participatory and sustainable coffee sub-sector in accordance with the National Coffee Policy, 2013.

Government has also been instrumental in extending poverty alleviation programmes from which coffee farmers have benefited. Farmers have been supplied with coffee seedlings and been given loan facilities as measures to promote the growth of the crop.  However, in some cases, there have been gaps. 

In Bududa district, for instance, Operation Wealth Creation distributed some coffee seeds last year that farmers rejected, citing poor quality. The farmers claimed they got the seedlings during a wrong season, and the species were of poor quality.

With the new coffee law, the government seeks to remove such challenges. “Coffee is a beverage and should conform to required health/safety standards. The quality of coffee, machines used by the processors/brewers/baristas must not compromise the health of a consumer,” the National Coffee Act 2021 states.

The law also seeks to ensure proper storage of the produce. Section 53 of the Act provides a list of offences which are punishable, including operating an unregistered coffee nursery or seed garden and selling substandard or diseased planting materials.  These will be punished by “a fine not exceeding one hundred currency points or a term of imprisonment not exceeding four years, or both,” according to the Act.

These penalties will also apply to possession of immature cherries, poorly storied wet cherries or heaping coffee leading to molding. Coffee processors and operators of hullers who have no licenses will also be penalized. 

Although these measures are aimed at adding value to the crop, Mr Andrew Rugasira, a sector player, argues in his article in Daily Monitor recently that value addition translates to higher producer prices when producers/farmers are organized, capitalized and control as much of the value chain processing as they can. 

“Value retention is not just about the mechanical side of setting up factories but committing long-term investments to strategic brand marketing, retail partnerships, logistics and distribution infrastructures. Brazil, Colombia and Vietnam give us insights into the possibilities of these investments as well as promoting local consumption,” he states.

The two-year suspension of ICO membership by Uganda has thrown a potential spanner in the works. The government defends its decision to withdraw its membership, saying the agreement only favours consuming countries, and not the producers. 

It argues that the two-year absence will give the country an opportunity to use the resources to further enhance its coffee sector and focus on the aspirations of Coffee Roadmap to increase production to 20 million bags in the coming decade. 

It also claims that there are other countries that are not members of the ICO who have continued to perform well internationally. As a result, Uganda has sought to partner with other African countries to develop strategies to enhance production and also start a campaign to boost domestic coffee consumption in Africa. 

According to the Uganda Coffee Development Authority, the agreement does not address barriers to trade imposed through high tariffs on processed coffee by developed/importing countries which disadvantage producer countries resulting in farmers getting low prices, and promotion of value addition. UCDA argues that Uganda needs unconditional market access that allows for export of value-added coffee not only green coffee.

However, Mr Rugasira disagrees in his article saying: “The problem with market access isn’t necessarily with tariff barriers, but the non-tariff barriers that confront exporters of value added coffees. I remember spending two years just to get supermarket buyers to accept to list our coffees, and this was just half the battle! Even with duty-free access, we will find it hard to sustain a presence in these highly sophisticated markets where our competitors have a 100-year head start!”

It will definitely not be business as usual for government after pulling out of the ICO. It also means a lot of work for Uganda to ensure that the country does not fall in performance internationally. The government also has to convince that farmer in Bududa, who grows Arabica coffee or that one in Entebbe who grows Robusta coffee that they will find market for their produce at the end of the season.

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