3 minute read
Coffee sector progression from Marketing Boards to a fully- fledged Authority
Although the cooperatives succeeded in aggregating farmers’ produce, marketing remained a problem. This would lead to the emergence of statutory marketing boards.
ganda’s export earnings have
Advertisement
Uincreased over the years and remain disproportionately dominated by agricultural products, which account for 80% of total exports.
Some of the leading exports include coffee, fish, maize, tobacco, and tea. The dominance of crops such as coffee dates back to the colonial era when they were grown as official government crops.
The sector was mainly dominated by the Indians who established factories across the country and took over-processing and marketing while the government retained the research, seed breeding, extension services, input supply, and quality control functions. In addition, the government established three regional factories to absorb the increased production.
In the 1900s, coffee was introduced, followed by tea and tobacco. In the 1930s coffee took the lead as the country’s major foreign exchange earner, with cotton taking second place.
The Emergence of Marketing Boards
By the 1950s, however, the population had started revolting against the private sector due to exploitation. Farmer cooperatives, determined to organise and represent farmers’ interests, gained momentum around 1952. In response, the Government compensated the Asian entrepreneurs, took over ownership and transferred management to the Cooperative Unions.
Although the cooperatives succeeded
in aggregating farmers’ produce, marketing remained a problem. This would lead to the emergence of statutory marketing boards, to among others, stabilise produce price in the face of fluctuating world rates, ensure the commodity-dependent economy against turbulent world market conditions, promote and encourage orderly marketing of the country’s leading crop exports, and promote an increase in their production. Other motivations included the strengthening of the producers’ bargaining power and guaranteeing a fair price for farmers.
Thus, the Coffee Marketing Board was constituted under the Coffee Act of 1963, while other boards were constituted in the subsequent years. The farmers in primary societies supplied to the unions, who later sold to the various marketing boards.
But the subsequent instability in the country gravely affected the marketing boards, setting forward a downturn not just in their fortunes but in crop production in general.
By the time the NRM government came to power in 1986, all the marketing boards, like other state corporations, were no longer the thriving enterprises they had once been. High running costs, huge debts and general mismanagement had left the boards on their knees, requiring bailouts from the Central Government.
Like other major public corporations facing the same dilemma, the marketing boards were consequently swallowed up in the liberalisation of the 90s that saw the economy shift from public control to private-led.
Although liberalisation gave the economy a much-needed boost, it had the reverse effect on producer organisations and cooperatives. Once-powerful cooperatives like East and West Mengo, and the Bunyoro Kitara Growers Cooperative Union all collapsed, precipitating the eventual closure of the Cooperative Bank that was their source of money for crop financing.
Filling the gaps
The Coffee Marketing Board (CMB) was replaced by the Uganda Coffee Development Authority (UCDA) with a relatively similar mandate.
The restructuring meant that cooperatives could now interface directly with the buyers and processors, without marketing board intermediaries.
UCDA’s mandate is restricted to regulation and promotion. It does not extend to the buying and selling of coffee which is left to private actors. Neither does it extend to the provision of credit; that is the role of the Microfinance Support Centre, and the Uganda Development Bank (UDB), that Government has been recapitalising.
But while it is true that part of the motivation for the recapitalisation of UDB and the Microfinance Support Centre is to provide low-interest credit to farmers, and industrialists, the two financial institutions’ broad mandate, and their still limited capital portfolio mean they are incapable of meaningfully propping up crop value chains on their own.
