By Nelson Mandela Muhoozi
Coffee remains one of Uganda’s most prominent agricultural foreign exchange earners, and coffee processing is a propeller that whirls earnings.
However, the question of how much of the final market price coffee farmers receive has attracted significant attention from policymakers.
Researchers in the coffee sector believe farmers can increase their share of the final market price for their commodities if they undertake value addition to their commodities.
The history of adding value to coffee in Uganda is not that well documented although there were rudimentary ways of roasting to add value to coffee.
In addition, due to poor technology, early players in coffee value-addition produced inferior and poor-quality products, explaining why most coffee farmers and players remain at the tail end of the value chain, selling green beans.
The cost of processing coffee into finished and ready-to-consume products greatly contributes to the reason there are few players in the coffee value addition chain and explains the low domestic coffee consumption standing at about 3-5% of Uganda’s total annual production.
Over 95% of the total annual coffee production is exported as secondary processed green beans sorted into various coffee grades that meet international standards according to published data.
However, because fresh coffee cherries can deteriorate in quality if not stored properly, and because proper storage of fresh coffee cherries can be difficult, research recommends that farmers need to be motivated to add value to their fresh cherries as a risk management strategy.
Uganda’s domestic roasters face fierce competition although their graded coffee is good, and can be exported for higher revenues.
However, inadequate roasting equipment and packaging materials, coupled with the high cost of purchasing equipment explain why Ugandans in the coffee sector are not maximizing revenue from the crop.
The few companies involved in high-end value-addition in coffee are driven by the fact that the value increases at each stage.
Reports indicate that one needs approximately 5-7g of ground coffee to brew a $2 cup of coffee, meaning a kilogram will brew about 200 cups and fetch $400.
Compared to the sh2,200-2,500 per kilogramme of Kiboko coffee beans, where over 90 percent of farmers concentrate, the latter shows how more money is earned through value addition.
A 10kg coffee roaster with automated controls costs about $16,000 while a 1kg roaster goes for $4,800.
However, there are modern coffee roasters that cost less, believed to be viable for small companies that produce fewer quantities.
According to Ester Kamiza, the chief executive officer of Star Café, value addition at any stage comes with additional benefits. “You can start a small coffee Kiosk with just sh2m and benefit from value-addition,” she says.
“For companies involved in commercial coffee roasting, investment in appropriate technology is necessary although this requires more money. However, players need to do extra things if we are to compete,” he notes.
At the moment there are only about 12 registered domestic roasters according to Uganda Coffee Development Authority (UCDA). Three of these are located in the eastern Bugisu area of Mt Elgon and process Arabica coffees.
Two roasters are processing their coffee at the TANICA soluble coffee factory in Bukoba, Tanzania, and then re-package the powder in Kampala before distributing to the local and regional markets.
Of late, Uganda’s coffee sector has seen an increase in the number of players in the value-addition chain to over 20 companies, according to UCDA.
The National Union of Coffee Agribusinesses and Farm Enterprises (NUCAFE) is the first coffee company in East and Central Africa to commission Industrial Solar Power Plant in Uganda at their coffee processing factory.
The plant is purposely to enhance power sustainability in the production process and is funded by Agribusiness Initiative Trust (aBi) and NIRAS among others. Efforts are underway to build capacity within the industry to adopt the new guidelines aimed at protecting UCDA staff involved in cupping activities.
According to Jolly Ngabirano of Café Pap, the future of value-addition lies in young people. The youth, she says, are the ones pushing local consumption drive.
And as the economy advances, more coffee will be locally consumed, thus creating more need for roasters and more jobs in general.
According to UCDA, it takes concerted effort with partners and other players in the coffee sector to drive the modern coffee processing and value-addition initiative forward.
The International Growth Centre Paper on Ugandan Arabica coffee value chain opportunities says improving market positioning and pricing means working with larger roasters to improve the awareness of Ugandan coffee and in turn influence their consumers.
Ugandan coffee processors, according to the paper, will benefit from contact with international buyers through sharing samples and guidance to improve their production practices in order to meet international market needs.
The Paper recommends creating a single Ugandan coffee brand to carry the identity of Uganda’s coffee.
A symbol carried on all coffee packaging, the paper says, would raise end-consumer awareness of Uganda as a source of high-value Arabica, and over time help differentiate Uganda from its regional competitors.
Coffee exports performance
Coffee exports in June 2022 fell by 14% to 530,365 60-kilo bags of coffee valued at $83.79 million.
This comprised 444,197 bags of Robusta valued at $60.98 million and 86,168 bags of Arabica valued at $22.82.
This was a decrease of 14% in quantity but an increase of 43% in value compared to the same month last year.