Authored by: Joshua Isiko; Eric Mwima; and Samuel Mulomi.
Uganda exports over 6 million bags of green coffee beans annually. The different coffee booms have motivated the Ugandan farmers to adopt coffee growing as a commercial enterprise. Coffee is grown mainly for its berries which are grinded to produce a caffeine beverage.
Uganda grows mainly two coffee varieties: Robusta coffee and Arabica coffee. Despite the record of being the leading exporter of coffee in Africa, Uganda is among the least earners of revenue from coffee trade.
The global coffee production averages about 170 million bags which comes from Africa, South America, Latin America and Asia. However, out of the global coffee market of 460 Bn USD, the coffee producing countries of Africa, South America, Latin America and Asia get an aggregated amount of about 25 Bn USD. In Africa, the leading coffee producing countries are: Ethiopia; Uganda; and Ivory Coast, whose collective production accounts for over 60% of Africa’s Coffee output and contribute about 12% of the world’s total coffee production, earns 2.5 Bn USD.
Uganda wants to deal with all sectors of the economy to add value and act as an example for other African countries. That instead of earning 2.5 USD per kilo of FAQ (clean), we should earn at least 40 USD per kilo after processing.
Bigger revenue shares are being taken by processers. Germany earns 65Bn from coffee business even when they don’t own a single coffee tree.
This imbalance in the sharing of the coffee revenues is what the President of the Republic of Uganda, His Excellency, Gen. Yoweri Kaguta Museveni calls a ‘hemorrhage’.
Often quoting the biblical story of Esau and Jacob, he argues that even if Esau was the firstborn and deserved to benefit from this birthright, he foolishly sold it away for a bowel of bean soup!
The coffee hemorrhage starts right from the red cherry production. Preliminary data from a focused group discussion for coffee value-chain analysis conducted in July 2023 revealed that a red cherry farmer, if every input to produce one kilogram of red cherry is costed, that one kilogram of red cherry would cost up to UGX 18,000 which is way above the selling price of about UGX 2,500 to 4,000 per kilo. A cumulative analysis of value creation from seedling to high end coffee extracts, shows that Uganda loses about UGX 14,000 per kilogram of green bean coffee exported at USD 2.5 (UGX 9,000). This is the value lost in the form of time, land, labour and other inputs to the coffee value chain actors in Uganda. And while Uganda is earning about UGX 9,000 per kilogram of green coffee beans, Germany is earning up to UGX 150,000 per kilo.
Further hemorrhage is seen in how Africa toils to produce coffee, maize, minerals, tea, cotton, bananas, fish, timber, etc., but it does not gain from the high-end wealth embedded in their value-chains. Africa cheaply sells away the value of its commodities because she is lazy to invest in understanding the science, the technology of value addition, and investing in a few additional innovative steps that create wealth. This laziness or slumber is the new call which Science, Technology, and Innovation (STI) is taking head-on, to transform the most important raw materials—coffee; fruits; bananas; cassava; minerals; cotton; pathogens; etc., to create new wealth.
Similarly, due to lack of knowledge and ability to add value through the adoption of a few extra steps in value addition, Africa, perilously donates wealth to the commodity non-producing countries in Europe, North America and China. This is unacceptable and it must stop!
As Ugandans, we must do something to stop this hemorrhage.
Three key things should be done:
- Add value to coffee beans: We should set up high end processing facilities that can add value to coffee beans;
- Trade the high value coffee products through big corporations: Ugandan coffee traders should be encouraged to join other individual small business operations and form mergers or a group of companies to run as corporations with a focus on exports; and
- Re-define Ugandan coffee: Coffee value chain actors should be organized under both allotted and un-allotted shares to allow the use of dynamic sharing for coffee farmers. Here, Uganda’s coffee value chain will jump from seedling to roasting, right from the farm.
Instead of losing jobs in coffee roasting grinding, packaging, transporting, inputs for processing—electricity; water; telephone; to other people who simply earn more by adding value, the government of Uganda should invest in value addition and new wealth creation strategies.
Of course, this revolution won’t be without disruptions—or, if we may, sabotage, but the resolve to make it successful against all odds is what shall render its legitimacy and relevance. Revolutions are often threatened with all as such and more, but it’s the astuteness and unwavering resolve of the actors that uphold them. That, exactly, is the mind and act of both Gen. Museveni and the Science, Technology, and Innovation staffers.
