What you need to know:
- Uganda is the largest coffee exporter in Africa, seventh in the world and eighth largest world coffee producer. These rankings paint a picture of an industry with enormous potential to substantially swell government earnings and alleviate rural poverty
Uniquely blessed by geography and gifted by nature, Uganda is among the few countries in the world which prides itself in the variety of its indigenous coffee. Robusta and Arabica coffee grow natively in the low-lying areas around L. Victoria and the highland areas of Mt Elgon, the Rwenzori Mountains and Kisoro respectively.
Uganda’s coffee industry is largely dominated by smallholders in rural areas. While productivity has been on the rise, the sector seldom struggles with low productivity, occasioned by adverse effects of climate change, inadequate extension support and rudimentary farming technology, including post-harvest handling techniques.
These from time to time compromise quality of the product. Bleak deficiencies along the value-addition chain sometimes relegate our product to an inferior class, attracting much less than we should ideally be reaping from it. Limited access to and expensive agricultural financing has compounded the woes that primary actors in the industry have to contend with.
This notwithstanding, coffee has over the years remained Uganda’s top-earning export with government now targeting annual sales of up to 20 million bags by 2030 following the launch of the coffee roadmap in 2017.
The roadmap identified three pillars: Demand and value addition, production and enablers and nine transformative initiatives. These include building structured demand, branding Ugandan coffee, increasing local value addition, strengthening farmer organisations, supporting joint ventures, providing and promoting concessions, improving quality of planting material, improving access to quality inputs and developing a coffee finance programme.
Uganda is the largest coffee exporter in Africa, seventh in the world and eighth largest world coffee producer. These rankings paint a picture of an industry with enormous potential to substantially swell government earnings and stamp out rural poverty. Coffee is a solid pathway to wealth.
Despite its potential, the coffee industry, over the years, has staggered through a troubled policy framework relating to the legal architecture governing the sector. Similarly, the institutional apparatus at local and national level has not provided the much-needed stimulus. Attempts to create and sustain institutional infrastructure, including the Coffee Industry Board as early as the 1930s, the Coffee Marketing Board at national level proved an uphill-battle.
Local level cooperatives and small community farmer groups, especially those set up in the late 1980s and 1990s, succeeded in increasing yields and adopting improved farming techniques, which boosted household incomes. However, most of these formations had to wrestle with fraudulent conduct and institutional deficiencies, among others. Consequently, coffee growers were bereft of a louder voice in unison at the local and national level, which would elevate the bargaining power for their crop.
Besides the turbulent policy and structural regime which struck the coffee sector over the years, the industry was equally battered by the political turmoil in the 1970s and more than half of the 1980s. The global challenges of the time exacerbated the threats to the sector’s growth.
The emergence of the National Resistance Movement in 1986 ushered in a range of reforms from which various sectors, including the coffee industry, profited. These efforts focused on increasing and improving coffee production, reducing the amount of coffee smuggled into neighbouring countries and diversifying export crops to reduce dependence. This had a hand in regenerating the heart of Uganda’s economy and by early 1990s, coffee ranked among the highest merchandise for export.
Liberalising coffee industry
In 1991, government moved to liberalise the coffee industry and fully privatised the sector. However, a new outfit, the Uganda Coffee Development Authority (UCDA), was established and mandated to retain the responsibility over export quality control. In the immediate term, UCDA saw an exponential increase in coffee exports with production averaging almost 3.3 million bags from 1996 to 2001. However, in the mid-1990s, production went down due to the coffee wilt and in the early 2000s, low demand and rock-bottom prices on the international market dealt a hot slap on the industry.
While the country may celebrate the commendable strides so far, we are not blind to the big monster in the room, standing in Uganda’s way to earn big from her coffee – the missed opportunities for value-addition.
Additionally, the failure to leverage opportunities which come with working in clusters, inclusive participation of farmers, improved farm techniques severely undercut the potential of the coffee industry.
The time is now for government to consider revamping the cooperative movement as a fertile ground to coalesce efforts around improved production and quality of coffee, increase access to crop finance and enhance capacity of farmers to deliver through mechanised techniques.
UCDA is not sleeping. In recent years, it has signed a memorandum of understanding with the Uganda Cooperative Alliance in a bid to get more farmers into cooperatives and farmer organisations to ‘elevate their bargaining power and enable them benefit from other advantages’.
The authority has also led a push for more large-scale farming by engaging holders of huge tracts of land that is idle. In addition, the authority has put pen to a memorandum of understanding with Uganda Development Bank to ease coffee stakeholders’ access to cheaper finance. In August 2022, UCDA and Private Sector Foundation agreed to a memorandum of cooperation.
Efforts have also been made to support rural smallholders to add value to their coffee harvests. This attempt is driven through various sub-regional groups working together to ensure sustained production of high-quality produce which is then processed with the support of stakeholders, including entities such as AKIBA International.
AKIBA, a venture capital fund took initiative to fundraise through its local and international networks to support the industry at the local level. AKIBA deployed resources secured to support sub-regional coffee groups of Sebei Elgon Cooperative Union and Okoro Coffee Growers Union in offsetting their old debts with various creditors hence securing assets of these groups which had been tendered as collateral.
The groups can now pool these assets and mortgage them for bigger capital which will facilitate the expansion of their production capacity.
Targeted support to these farmers guided by an inclusive, robust strategy on value-addition would go a long way to improve Uganda’s rating in the global coffee market. As it is today, the market works to Uganda’s disadvantage since our product is sold in its raw form. The primary crop producers who invest heavily garner peanut returns while those who buy our product and add value reap handsomely. Value addition would not only increase earnings to government but would also immensely support poverty alleviation efforts in the rural areas through exponential increase in earnings.
Accordingly, there’s a string of strategic questions that we all need to mull over in the interest of shared national prosperity. How do we build up the allure of our coffee products so they can invite competitive prices?
Given that exporting processed coffee (roast and ground) requires it to be delivered within a particular time frame to ensure freshness, is there a way we can engage our national carrier, Uganda Airlines, to deliver coffee to the various export destinations in time?
Or does economic sense reside in setting up roasteries in the destination countries through bilateral agreements? What about signing bilateral agreements that ensure favourable tax regimes as opposed to what is currently in place now?
How about the packaging required for the coffee? How do we ensure the price is right so it does not affect export? From a broader perspective, how can we assure financing for distressed Ugandan agro-processing enterprises?
Better still, how can we sustainably utilise land to promote food security while at the same time spark the necessary stimulus for a rural agro-industrialisation impetus?
Supporting coffee farming
Various stakeholders are committed to supporting such efforts. AKIBA’s experience redirects focus on crop finance to facilitate procurement of high-quality seed, improved post-harvest handling technology as well as related costs for value-addition.
Local farmer ownership of the production line is indispensable for sustainability as much as promoting our coffee locally and internationally is imperative.
As government embarks on implementing the Parish Development Model, therein lies an opportunity to strengthen coffee value-addition. The model resonates with the local level impetus for agro-processing through which we can hand-hold small farmers along the journey of value-added production.
In a country blessed by geography and gifted by nature, our generation’s calling is to unlock the economic possibilities that agriculture can deliver for national transformation. It is this open altar call to all citizens that will relight our hopes for shared prosperity and assure the future of those who will come after we have left the stage.
Mr Kaheru is a commissioner, Uganda Human Rights Commission @ckaheru