9 minute read
The way forward: set up a soluble plant, explore new markets
Over the years, coffee production has continued to grow, posting 5.56 million 60 bags worth US$ 511.21m between March 2020 and February 2021, according to the Uganda Coffee Development Authority (UCDA).
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ccording to Emmanuel Iyamulemye Niyibigira, UCDA Managing Director, the coffee Authority is, however, still focusing on reducing postharvest losses by 50% across the coffee value chain, to increase volume and quality.
UCDA is also pursuing efforts to expand the area under coffee production by 15 per cent over the medium to longterm, as well as the yields per tree from 550gms to 880gms.
To do this, Iyamulemye says UCDA is focusing on research and development, investing in efforts to increase coffee sub sector players’ access to market information, and increasing volumes of direct exports by 29 per cent.
Additionally, UCDA has moved to promote Uganda as a global centre of excellence for Robusta Coffee and increase domestic consumption as well.
There is also a focus on the export of roasted and ground coffee, instead of the raw beans, to fetch a higher return for both the farmer and the state.
According to Iyamulemye, the farmers should form cooperatives at this time to get direct access to the markets, for then, they would enjoy the economies of scale. Over time, the Authority has been training stakeholders in good roasting, brewing practices and machine maintenance, in addition to ensuring standards development and compliance for roast and ground coffees.
“We are also providing motorized washing stations, and training in wet processing and drying techniques, and we already have demonstration centres for wet processing techniques,” he says.
UCDA is also focusing on promoting high-quality specialty and fine coffees since they fetch a premium price on the global market, as well as commercial coffees for the average consumer.
Showcasing Uganda coffee at the Dubai Expo 2020.
“In the next five years, we want to see coffee exports reaching 20 million bags. We want to phase out the distribution of seedlings and focus on productivity per tree. We also want to see Ugandans appreciating a cup of coffee and the consumption moving from the current 6 per cent per capita to 15 per cent,” Dr Iyamulemye says.
It is known that Uganda, like many other developing countries, suffers a huge trade deficit compared to the developing and first-world nations.
To reduce the gap, the country is partly banking on coffee and has just completed a coffee promotions strategy for China, looking at how Ugandan coffee can penetrate the Chinese market.
With this, the Uganda Coffee Developement Authority is currently looking at ways of supporting the private sector to penetrate the Chinese market.
The authority is also discussing with China to have preferential treatment in a market of1.4 billion people, such as export quotas, which could quintuple the volume of coffee exports over the next five years.
While that may sound ambitious, it may be achievable thanks to the surging demand for coffee in China’s largest and wealthiest cities.
China’s coffee market is estimated at US$ 11.5b in annual sales and is expected to grow by 10 per cent in the next five years. Additionally, Coffee consumption in China is growing at between 15 per cent - 20 per cent annually. It is also Starbucks’ second-largest market after the United States of America.
With the increasing volumes of organically grown coffee, Uganda has an advantage over other African countries to capture the China coffee market.
Coffee is by far Uganda’s most important export as it generates 20 per cent - 30 per cent of the country’s foreign exchange earnings.
In the next 5 years, we want increase coffee exports to 20 million bags. We also want to see Ugandans appreciating a cup of coffee and the consumption moving from the current 6 per cent per capita to 15 per cent.
Dr Emmanuel Iyamulemye Niyibigira, Managing Director - UCDA
The soluble plant
Globally, the soluble coffee market is growing each year as consumers of specialty and fine coffees increase, forcing an increase in production and innovation.
President Museveni has in the past, also criticised the export of raw materials, saying that with each export, a multitude of jobs are lost as well. In response, UCDA has made several efforts to set up a soluble plant to process Uganda’s beans before they are exported.
However, to date, no physical plant has been erected to process the beans, due to several challenges.
“We have, however, found a way around this, and now we are working with the Uganda Development Corporation (UDC) to put seed money to attract investors in that space. Very soon we shall launch it,” Iyamulemye says.
He says, as the country moves to add value to the coffee beans, farmers’ incomes are also increasing and could grow 70 per cent if they trade in graded coffee.
He says Uganda is capable of earning gross revenue of US$ 15 from every 3kg of green coffee after it has been processed into instant coffee, compared with only US$ 1.5 when exported in its raw form.
According to Iyamulemye, UCDA’s dream is to see Ugandans walking on the streets and in villages feeling proud to be involved in the coffee value chain.
Coffee is grown and exported by more than 50 developing countries, but the major consumers are in all industrialized countries such as the US, EU and, more recently, Japan.
The country is also promoting the growing of organic coffee, which fetches better prices on the world market.
Organic coffee is grown without the use of fertilisers and pesticides, and so is perceived as healthier and thus fetches a better price. More than 1,000 tonnes were exported last year and fetched a price of US$ 300 per tonne.
YCE after meeting with then Prime Minister Dr Ruhakana Rugunda and Prof. Ezra Suruma.
The Uganda-China coffee Promotions Strategy
In 2019, a team from the Chinese Yunnan Coffee Exchange were in were in Uganda on a fact-finding mission on how to work with Uganda Coffee Development Authority to get Ugandan coffee in China.
Trade with China
lthough there were some hesitations
Aif there was a market for Uganda’s coffee, UCDA through its market intelligence and information systems learnt that China was one of the emerging markets for coffee from Uganda.
By 2020, Uganda exported 3,800 60-kg bags of coffee to China, which proved the readily available market of Uganda’s coffee in China.
Formulation of Uganda China Coffee Promotions Strategy
To further strengthen the market and also widen it, the coffee regulator decided to formulate the Uganda-China coffee Strategy to better understand the market to package coffee products for different interests.
“As a way of making us focused, better promote coffee, we have developed a coffee promotion strategy focusing on China,” said David Katungi, the UCDA Director Strategy and Business Development.
The strategy has analyzed the China market, considered market penetration for Uganda’s coffee, what is required, tastes and preferences, structures in place for Uganda to market her coffee in China among others added Katungi. In addition to the strategy, Katungi explained that they have established a promotion office in Guangzhou.
Potential coffee products needed by China include green beans, and recent analysis reveals that there is also demand for coffee powder, ready to drink coffee, instant coffee among others. He added that as a country, the plan is to establish a soluble plant that will carry out tertiary processing of coffee to produce ready to drink coffee products.
To that effect feasibility studies are ongoing and these are likely to be established in
some of the industrial parts, that are spread across the country.
Another initiative to further market Uganda’s coffee is that UCDA’s plan to invest in coffee roasters that will be given to upcoming coffee roasters especially the youth who are selling coffee locally through cafés and coffee shops that are being established in almost all urban centres.
Although the regulator is now more focused on emerging markets such as China, UCDA is also stepping up quality parameters, to ensure that those considered mature markets like the European market especially Italy, that have been importing Uganda’s coffee continues.
“The EU market is considered a mature market. You do not expect more expansion in consumption, our attention is on emerging markets, we are looking at beyond China like Asia, Russia, the Middle East, UAE and that is why we are participating in the Dubai expo. Through these exhibitions we shall be in a position to attract more buyers of our coffee,” Katungi said.
Other emerging markets include those from North Africa such as Algiers, Morocco, Sudan, Egypt, among others. Apart from foreign markets, UCDA has embarked on the promotion of Uganda’s coffee within the country, through domestic coffee consumption campaigns.
The aim is to not only consider foreign markets, as these are easily affected by price fluctuations which might affect payments to farmers.
This is being enhanced with the capacity building of youth and women groups, to become barristers, coffee roasters, who are now running most of the coffee shops around town, which is also in line with SDG 5, that promotes equity for women and youth groups.
David Katungi, Director Strategy and Business Development - UCDA.
So where is the coffee for export coming from?
A recent survey by UCDA to find out the number of households growing coffee, showed an increase of 100,000 households, bringing the total to 1.8 million up from 1.7 million.
This follows a campaign to increase domestic coffee production five years ago, for the country to harvest 20 million bags annually.
For now, the country harvests about 8 million bags. Apart from the increment in coffee farming households, there are new areas that previously did not grow coffee.
Examples include the West Nile, parts of Northern Uganda including parts of the Karamoja region. Those in highland areas like Zombo are growing Arabica in addition while those in low land areas are growing Robusta.
“Such developments mean more coffee in the country that is why exploring other markets like what we are doing in China will help us market our coffee in addition to the ongoing promotion of domestic coffee consumption,” he added.
He also warned that as the institution celebrates 30 years of coffee production, there is an increase in production of coffee from 5 million bags in the financial year 2014 to 15 to the current 8 million, coupled with an increase in exports to 6 million, there is need to prepare for emerging challenges such as higher volumes that will need market, adding that one way of addressing that is through increased campaigns of domestic coffee consumption just as Ethiopia is doing, where it consumes 50% of its coffee and exports the other half.
“So we need to increase domestic coffee consumption because prices are volatile, this time it’s a good price next to its bad. And this affects farmers, if they are consuming coffee then we stabilize the prices,” he added.
