MARKETING AND COFFEE PRICES

23. Where can I sell my coffee?

If you are a farmer you can take your coffee to the primary processing factories(hullers), there are always buyers waiting at the factory or you may take to a buying store in your area.

If you are a trader, you can establish contact with exporters and sell to them (refer to list of current coffee exporters).

24. How can I market my coffee?

If you are a farmer, it is better to belong to a farmer group and sell in bulk. You will be able to negotiate for a better price when you are in an organized group.

25. Where can I get market information on the coffee sector locally and globally?

UCDA disseminates market reports on a daily basis showing how both the London (Robusta) market and

the New York (Arabica) market performed and also the price trend for the local market.

26. How do farmers and other stakeholders receive the information?

This information is disseminated via e-mail, the UCDA website at www.ugandacoffee.go.ug, social media and SMS. UCDA also produces a monthly report that is shared using the same channels.

27. Why doesn’t Government set minimum producer prices for coffee as it used to do in the past?

The coffee sector is a liberalized one where there is free entry and exit into the coffee business. Therefore, prices are determined by the forces of demand and supply.

28. Are coffee farmers better off now than they were before liberalization?

Yes, coffee farmers now get 60%-70% of the export price unlike before liberalization where they used to get 20%. Secondly, coffee farmers now get paid promptly and can sell their coffee at their own convenience unlike before when they would sell under their respective cooperatives and would wait for a long time to be paid.

29. Which country takes the highest market share?

As a bloc the EU countries take the biggest percentage of Uganda’s coffee (about 70%). In Africa, Sudan takes the biggest percentage of about 12% and it is the second importer of Uganda’s coffee after EU. The EU countries include Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain and Sweden.

30. What is the market share of sustainable/ specialty coffees compared to conventional coffee?

In the Coffee Year 2019/20 sustainable coffees had a market share of 4% of total exports and 7% of total export value.

31. How can Government help farmers to add value to their coffee?

Government is doing a lot to ensure coffee farmers and other stakeholder realise value addition including:

• Provision of the right planting materials

• Provision of inputs e.g. fertilizers • Provision of wet mills and motorized pulpers to able farmers and organizations • Joint venture in China which has stimulated demand for Uganda coffee • Provision of financial assistance to farmer cooperatives involved in certified/sustainable coffees • Tax waiver on packaging materials

32. How is coffee marketed internationally?

UCDA, in partnership with coffee exporters and producers, markets coffee at international exhibitions annually. UCDA supports its stakeholders to exhibit their coffee and meet with potential buyers at the various exhibitions in Europe, the United States of America, China, South Korea and Japan.

Coffee is also marketed internationally in two major markets, the London International Financial Futures and Options Exchange (LIFFE) in UK for Robusta and New York Intercontinental Exchange (ICE) for Arabica. This was formerly called the Coffee Sugar Cocoa Exchange (CSCE). There are several commodity exchanges such as in Brazil, Germany, France, Singapore where coffee is also traded. The coffee trading is guided by the International Coffee Agreement (ICA 2007).

33. What is the position of Uganda in Global Coffee Production?

Uganda is ranked 8th in global coffee production and the second after Ethiopia in Africa. It contributes about 2.5% of total world production (https://farrerscoffee. co.uk/top-10-coffee-producing-countries-around-theworld/).

34. Does Uganda have an auction system? If not, which type of system does Uganda use?

Uganda does not have an auction system. Coffee is sold directly by individual exporters to individual buyers who are guided by the New York Intercontinental Exchange (ICE) for Arabica and the London International Financial Futures and Options Exchange (Robusta) while negotiating the price of the coffee being bought or sold. This is referred to as the Direct Sales Mode. The international coffee transactions are guided by the European Delivery Coffee Contract (EDCC) which stipulates clearly the country and place

of arbitration in case of any breach of contract of either the exporter or the buyer.

35. What are the prices of coffee?

The prices for coffee are posted on the UCDA website daily. Go to: www.ugandacoffee.go.ug.

36. Why are farm gate prices very low this year (2020)?

Farm gate prices are currently low due to low global prices which dictate the movement of prices at the local level. Global prices are low due to an expected global supply surplus resulting from increased production from major world producers like Brazil and Vietnam on one hand and reduced demand due to COVID-19 pandemic.

37. Coffee prices are affected by both fundamental and technical factors. What are they and how do they affect the global coffee market?

Fundamental factors are those related to supply and demand for coffee directly i.e. production, exports, stocks (both opening and closing stocks) and consumption. Technical factors are those which rely on analysts who use a number of derivatives to ascertain where the markets would be heading-whether downwards or upwards. They normally use time series analysis (moving averages (MA), Relative Strength Index (RSI) and Over the Counter (OVC) to ascertain whether the market is oversold, undersold or normal. This assists the speculators to decide whether to invest in coffee or other commodities. Their decision has a bearing on the global pricing of commodities (coffee inclusive).

38. What are futures and options in coffee trading? How are they used in the coffee market?

Coffee futures are standardized, exchange-traded contracts in which the contract buyer agrees to take delivery, from the seller, a specific quantity of coffee (eg. 10 tonnes) at a predetermined price on a future delivery date.

Coffee options are option contracts in which the underlying asset is a coffee futures contract. The holder of a coffee option possesses the right (but not the obligation) to assume a long position (in the case of a call option) or a short position (in the case of a put

option) in the underlying coffee futures at the strike price. This right will cease to exist when the option expires after market close on expiration date.

Consumers and producers of coffee can manage coffee price risk by purchasing and selling coffee futures. Coffee producers can employ a short hedge to lock in a selling price for the coffee they produce while businesses that require coffee can utilize a long hedge to secure a purchase price for the commodity they need. Coffee futures are also traded by speculators who assume the price risk that hedgers try to avoid in return for a chance to profit from favorable coffee price movement. Speculators buy coffee futures when they believe that coffee prices will go up. Conversely, they will sell coffee futures when they think that coffee prices will fall.

39. Where can I buy green coffee beans (kase/ hulled coffee)?

You can buy coffee from farmers mainly at primary processing factory (huller) or if you are a trader you may wish to set up a buying store where farmers who store hulled coffee/Kase can always come to sell to you.