Report ndustry

Uganda's Coffee Ambitions: Brewing a Path to 20 Million Bags by 2030

By Vincent Moranga

Uganda's position along the equator offers favorable weather and fertile soils that support agriculture. One of Uganda's shining stars is its renowned product: Coffee, often celebrated as "the sweet aroma from the source of the Nile."

Coffee production in Uganda is mostly grown by smallholder farmers on rain-fed plots less than an acre in size. Intercropping is widely adopted by Uganda farmers to protect against shocks when one crop does not perform well.

Presently, coffee contributes nearly a third of the country’s export earnings. According to the USDA, coffee exports were 6.3 million 60-kg bags valued at US$862 million, which accounted for about 22% of all export earnings in the 2021/22 financial year, pointing to the crucial role the sector plays in the economy. Fast forward to 2023, data from the Uganda Coffee Development Authority (UCDA) show that the East African country contributed a substantial US$78.96 million (UGX 298.2 billion) to the country’s revenue in the month of October.

The total coffee exports for the month surpassed 470,080 60 kg bags, comprising 410,113 bags of Robusta valued at US$66.87 million (UGX 252.56 billion) and 59,967 bags of Arabica valued at US$12.10 million (UGX 45.7 billion). From this date, one can tell Arabica is not the dominant coffee variety in Uganda even though it commands a higher price on the market. The reason is that growing conditions in Uganda limit farmers’ production of Arabica coffee but favor Robusta.

While coffee holds a significant place in the lives of Ugandans, much remains unexplored regarding how it sustains their traditions, culture, and livelihoods. The country however has a bold plan to raise production to 20 million bags by 2030. The roadmap was launched in 2017 and almost 5 years later, Uganda has been able to substantially increase its production from 4.7 million bags at the time to over 6 million at present.

Roadmap To 20 Million Bags By 2030

Work towards the ambitious roadmap gathered pace in 2019 when the country was finally able to put together a detailed budgeted work plan. This would serve as a guiding star for the country as it navigates its course to raising production to 20 million bags, a feat if achieved today would propel Uganda from seventh to third largest coffee producer in the world.

Perhaps the most important reason why the country embarked on this endeavor is evidence that achieving the goal would triple the income of 1.2 million smallholder coffee farmers in the country whose population at the time would have expanded to 69 million.

The work plan determined that doubling coffee production by smallholders to around 9 million bags is feasible in 5 years. This goal entails executing a rehabilitation and renovation (R&R) program that upgrades about 400 thousand smallholder coffee farms, or about one-quarter of the total number of coffee farms in Uganda.

Coffee growing regions in Uganda

SOURCE: Harvest Money

SOURCE: Harvest Money

The total cost of this process would be around US$170 million, according to the work plan. If successful, it would increase Uganda’s export value by US$450 million per year by 2025. During the session, it was also shown that an effective R&R program would greatly enhance the coffee infrastructure, input, and service delivery, making it possible to double production again to 20 million bags by 2030.

The potential for this quick increase in production, according to the work plan, lies in the current low production per tree: on average around 500 grams of clean coffee, and for lowinput-output farmers around 200300 grams per tree. The work plan is focusing on the latter group which has the potential to double its production per tree through a set of relatively low-cost and easy R&R interventions (such as pruning, stumping, weeding and low application of fertilizer).

If the R&R interventions were put into practice, developers of the work plan expressed confidence that the behavioral change in this group would drive the initial doubling of coffee production.

A Leading African Coffee Exporter With Unexplored Opportunities

Uganda has made some significant steps towards achieving its 2030 goal. As it stands, Uganda is Africa’s leading coffee exporter and is ranked the sixth-largest producer of Robusta globally in terms of volume and third globally in terms of quality, according to the Uganda Coffee Development Authority (UCDA). USDA forecasts that Uganda’s coffee production will increase by 4 percent to 6.85 million 60-kilogram bags in marketing year (MY) 2023/24 due to good rainfall.

The maturation of new highyielding Robusta seedlings planted in 2019, just when the 2030 work plan was gathering momentum, is also reported to have contributed to this growth in production.

As part of the coffee roadmap, Uganda’s government has provided farmers with high-quality seedling varieties and extension services since 2017. As a result, Uganda’s area planted increased dramatically as non-traditional areas began to grow Robusta. USDA estimates acreage dedicated to coffee increased from 450,000 hectares in MY 2016/17 to 560,000 hectares in MY 2019/20.

USDA however observes that as government support gradually dries up due to financial constraints, some farming cooperatives and millers have begun to provide support for new coffee acreage, albeit at a smaller scale than the government’s pre-COVID efforts. As a result, the US agricultural agency estimates that Uganda’s MY 2023/24 area planted will increase slightly from 565,000 to 570,000 hectares.

Higher production has increased exportable supplies. During the 2023/24 market year, exports from the Pearl of Africa are anticipated to increase 4 percent year-on-year to 6.52 million bags. According to the UCDA, Uganda’s top export destinations include Italy, Sudan, Germany, India, the United States, and Morocco. According to the March 2023 UCDA report, Uganda accounted for 21% of African coffee exports, while Sudan consumed 17.66% and Morocco consumed 1.39%. Locally, some of the exporting companies of Ugandan coffee are UGACOF (U) Ltd, Ideal Quality Ltd, Olam Uganda Ltd, Kyalanyi Coffee, Touton Uganda, KUWACOM (U) Ltd, JBER Coffee Ltd, and Ibero Coffee.

Riding The Wave Of Global Coffee Growth

Uganda's focus on higher coffee production bet on an upward trend in global consumption of the beverage as local demand remains insignificant. Likely the market is forecast to continue expanding throughout the coffee roadmap period. According to Coherent Market Insights, the global coffee market was valued at US$127 billion in 2022 and is predicted to witness a CAGR of 4.72% from 2023 to 2030. Coffee consumption worldwide is also rising by 2.0–2.5% annually, according to S&P Global Commodity Insights.

Europe is a leading destination for Uganda's coffee, accounting for 64% of Uganda's coffee exports. Italy has the largest market share (34.57%), followed by Germany (13.11%). Germany imported 48,879 60-kg bags of coffee from Uganda in December 2022, according to the UCDA. In Europe, the coffee pods and capsules market is the largest, and its market size is anticipated to grow from US$26.80 billion in 2023 to US$37.43 billion by 2028, at a CAGR of 6.91%, as most people prefer instant non-alcoholic drinks, according to Mordor Intelligence. The growth is attributed to coffee being considered a healthy option and offering drinks containing properties perceived as better and healthier. With more people drinking coffee, demand is certainly expected to rise in this region further creating more opportunities for Ugandan coffee.

In March 2023, the government of Uganda acquired a South Korean quality control export through an agreement with the Korean Institute for Advancement of Technology to help Uganda exports meet South Korean import requirements. This collaboration may facilitate future exports to the lucrative South Korean market further increasing the revenue that the country earns from coffee exports.

Addressing Challenges For Sustainable Growth

Uganda's coffee subsector however continues to face numerous challenges, such as pests, diseases, pooryielding varieties, and undifferentiated market demand, which it must overcome to fully unlock the potential of the industry.

Pests and diseases, such as coffee wilt disease and the Black Coffee Twig Borer (BCTB), have been critical challenges for Uganda, hindering the growth of this important sub-sector. To address these challenges, farmers have been enlightened to use pest-free planting materials from UCDA-certified coffee nurseries and beetle traps developed by the National Coffee Research Institute (NaCORI) to combat the Black Coffee Twig Borer.

Additionally, NaCORI has developed new high-yielding and disease-resistant Arabica varieties with support from the EU-EAC MARKUP. The new Arabica varieties are resistant to diseases such as leaf rust and coffee berry disease compared to the old varieties.

Additionally, the Uganda Coffee Farmers Alliance (UCFA) has partnered with the National Coffee Research Institute (NaCORI) and the National Forestry Resources Research Institute (NaFORRI) to develop agroforestry coffee, which commands a premium price.

Marketing also presents a challenge to Uganda's undifferentiated market demand. Despite the growth in exports, the majority of coffee is sold unroasted to traditional markets such as Italy, Belgium, and Sudan.

Building up local capability in this area is thus necessary if Uganda is to extract more revenue from its produce. The country has 38 registered coffee roasters with some producing brands such as Omukago, Ankole Robusta Coffee, Kibinge Coffee, Elgon Pride, Great Lakes, Masaba, Savannah, Zigoti Coffee, and Star Café for both local and international markets.

Under the coffee roadmap, Uganda plans to build at least two soluble coffee plants in the next five years, according to UCDA Managing Director Emmanuel Niyibigira “We are also looking at branding our coffee,” Niyibigira said noting that this would be crucial in elevating the Uganda coffee brand globally and attracting premium prices.

ETHIOPIA'S COFFEE CULTURE AND VALUE ADDITION: A LESSON FOR UGANDA

According to the USDA, Africa's largest coffee producer is forecast to produce 8.35 million 60-kg bags of coffee for 2023/24. During this period, exports are expected to reach 4.83 million 60-kg bags, while the rest is consumed locally. The coffee industry remains the driving force of the country's economy, socio-cultural life, and spiritual life, with about 25 percent of the country's population depending on the coffee value chain directly or indirectly.

One critical lesson Uganda should learn from this titan lies deep in its culture. Ethiopia consumes almost half of its coffee as the beverage forms an essential component of Ethiopian culture and society. This gives it some of cushion should volatility in its traditional markets greatly limit its ability to sell its coffee outside its borders. The same cannot be said for Uganda which consumes less than 5 percent of its total annual production.

To support the domestic coffee campaign, the Uganda Coffee Development Authority (UCDA) has partnered with universities by providing espresso machines and grinders to promote coffee consumption and create avenues for skill development among youth. UCDA also engages the youth with coffee clubs in training on coffee agronomy, brewing skills, and quality control in the coffee value chain. Lastly, UCDA has been keen on providing espresso machines and equipment to learning institutions and government organizations to drive up coffee consumption, promote value addition, and support the ongoing coffee rehabilitation program.

Coffee cafés have also proliferated in Kampala and other cities and this has started driving up consumption. Additionally, millers have begun offering coffee in small packaging sizes that are convenient and affordable for domestic buyers to meet rising demand. With these initiatives, USDA projects that domestic consumption is projected to rise to an estimated 325,000 bags in 2024, up from 300,000 in the year prior.