Politicians are drinking from the wrong Uganda coffee cup

On the face of it, you wouldn’t think that something like the National Coffee Bill that’s before the Uganda Parliament would cause much controversy. But it has.
The most controversial element of the Bill is the one that would require coffee farmers to register. This has led to fears that small-scale farmers – who are the overwhelming majority - will be forced out of the sector.

President Yoweri Museveni has said fear is based on a misunderstanding, which confuses registration with licensing. If there were licensing, then a farmer would need to get permission to grow coffee. With registration anyone can grow, but having done so, go to the government and record in a book that you are growing the crop.

Uganda currently exports 4.5 million bags of coffee, and had set itself an ambitious target of exporting 20 million bags by 2020. There is simply no way Uganda, even with the intervention of a miracle, one can increase coffee exports nearly five-fold in the few months remaining into 2020.

In a world market flooded with coffee, and where prices continue to tumble, the argument is that Uganda can be the coffee giant it seeks to be by improving the quality of its crop, which will also lead to higher volumes of exports. That is a noble goal, so why is it problematic?

One, is a trust issue. No one trusts that this is the “true” goal of the Museveni government. This is evident from the loaded question, of “why coffee only?” and statements about “will it be potatoes, bananas, and millet next?”

What no one is saying publicly is that they think the government wants to turn registration into an instrument to hand a monopoly to a few, probably politically-connected, players. The Buganda Kingdom is fretting because it senses what happened to banana growing, once dominated by the region, could happen to coffee: That smaller growers in Buganda will be disproportionately punished, and coffee growing will move further southwest, where larger handlings are still possible, unlike in Buganda where demographic pressures are increasingly shrinking the size of land holdings.

There is precedent for this in the recent Sugar Bill, which aims to create regional monopolies by allocating a specific area of sugarcane production to one manufacturer to grow and crash the cane.

It’s unlikely that Uganda will ever export 20 million bags under the NRM government, in part because of policy capture, a lack of state imagination, and a preference for force and threats instead of incentives, means it cannot release the creativity that will make that happen.

It is the kind of approach we saw in the muddle-headed social media tax, which slapped a daily access fee to social media, leading to up to three million people who accessed the internet via mobile phone in Uganda dropping off. The government also has only got 17 per cent of the revenues it was projecting to earn from the tax.

The government should not repeat this mistake with coffee. The Coffee Bill should just deal with two things – quality and incentives. It should set out more elaborate standards of coffee that should come to market. Coffee buyers will then demand it, and growers – small, medium, and big – will adjust to provide it. They do not need to be on a list to do that. In other words, regulate the crop, not the grower.

Then throw incentives at farmers. For starters, the industry needs insurance instruments for farmers to deal with crop failures (this is not a price stabilisation fund, which I think distorts the market and can create a moral hazard). However, legislation and policy for crop insurance in Uganda is still primitive.

Coffee growers can also be offered generous rebates based on innovation and production of premium beans. I always go back to those clever Colombian coffee farmers, who also grow flowers and raised a special breed of bees on their farms. With the bees perching on the beans, they produce a unique type of valued coffee that is highly prized globally. Since there are reports of foreigners who have licenses to grow marijuana for export in Uganda, I imagine intercropping weed with coffee, and then washing it in water soaked in volcanic ash from Mt Elgon might just do the trick.

A fellow who produces coffee like that, would get rebates on all his costs after export.
But the ultimate driver of coffee standards is the consumer. More Ugandans need to drink coffee, and to demand world-class beans. The way you do that is by pursuing policies that expand the middle class, and your working class – mostly industrial workers. Those are the people who drink coffee.

In the end, there is only so much that Uganda can do with coffee to make coffee great. What can really do something big about is the drinkers.

Mr Onyango-Obbo is the publisher of Africa data.visualiser Africapedia.com and explainer site. Roguechiefs.com. Twitter@cobbo3.