By Nelson Mandela Muhoozi
Uganda’s coffee sector has shown robust performance, balancing the challenges of fluctuating exports and rising global demand.
Despite a 7.67% drop in coffee export volume in September, Uganda’s coffee sector witnessed a substantial 53.79% increase in export value compared to the same period last year, driven primarily by the appreciation of global coffee prices.
Uganda Coffee Development Authority (UCDA) monthly report paints a complex picture of Uganda’s coffee market, reflecting both obstacles and opportunities that influence its standing on the international stage.
Decline in export volumes, boost in value
In September 2024, Uganda exported 532,212 bags of coffee, a decrease from the previous year’s quantity. The country earned $144.7 million from these exports, with Robusta coffee alone contributing $137.19 million from 504,576 bags, and Arabica coffee bringing in $7.51 million from 27,636 bags.
The decline in export volumes was more significant for Robusta, which dropped by 17.02% in quantity, while Arabica’s volume fell by 18.02%.
However, these reductions were offset by higher global prices, leading to a remarkable rise in export earnings.
The coffee sector’s value growth is attributed to ongoing climate challenges in Brazil and Vietnam, the world’s largest producers of Arabica and Robusta, respectively.
Prolonged dry spells in these countries have curtailed yields, fueling supply concerns and creating room for Uganda’s coffee to command higher prices.
This trend is expected to drive a supply deficit in the global market for the upcoming coffee year, which may keep prices elevated, potentially benefiting Uganda’s coffee exports further.
Year-on-Year coffee export performance
For the 2023/2024 coffee year, Uganda exported a total of 6.35 million bags, generating $1.4 billion in revenue.
This marks a 3.42% increase in volume and a staggering 48.97% increase in value over the previous year. This performance showcases the coffee sector’s resilience and the potential for growth, despite external pressures.
Premium pricing for quality grades
Uganda’s coffee continues to capture premium prices on the international market. In September, the average export price per kilogram was $4.53, up from $2.73 in September 2023.
This rise reflects increasing demand for quality, sustainable coffee grades. Premium grades such as Sustainable Robusta, which sold at $5.69 per kilo, and Mt. Elgon Arabica at $5.76 per kilo, highlight how Uganda’s diverse coffee profiles are appealing to discerning markets.
Robusta accounted for 94.8% of Uganda’s coffee exports, a slight increase from August. The rising market share for sustainable or organic-certified coffee demonstrates growing demand for ethical and environmentally friendly products.
Sustainable and organic Robusta, for example, fetched a premium price of $5.40 per kilo, signaling potential growth areas for Uganda’s coffee sector.
Exporters’ performance
The competitive landscape among Uganda’s top coffee exporters intensified in September, with Olam Uganda Ltd leading with a market share of 16.73%, up from 11.34% in August.
Other notable players include Ugacof (U) Ltd and Kyagalanyi Coffee Ltd, each securing over 11% of the market share.
The top 10 exporters collectively accounted for 76% of the total exports, indicating a concentration of export activities among key players while demonstrating the need for enhanced competition at the exporter level.
This competitiveness underscores the significant role of the private sector in shaping Uganda’s coffee market. The drive for quality and consistent supply by exporters is also improving Uganda’s reputation as a reliable source of high-quality coffee.
Global demand, export destinations
Europe remains the top destination for Uganda’s coffee, with Italy, Germany, and Belgium among the largest importers.
In September 2024, Italy claimed 36.2% of Uganda’s coffee exports, followed by Germany with 15.36% and India with 8.6%. This European demand is crucial, as the region accounted for 71% of Uganda’s total exports.
Moreover, coffee exports to African countries, particularly Morocco and Sudan, are expanding, highlighting potential growth opportunities within the continent.
Uganda’s diverse customer base reflects its ability to tap into various regional markets, making it resilient to global demand fluctuations.
Investment in farmer capacity, sustainability initiatives
UCDA is working actively to improve productivity through investments in capacity-building and sustainable practices.
In September 2024, UCDA trained 5,174 farmers on Good Agricultural Practices (GAP), Climate-Smart Agriculture, and Sustainable Land Management (SLM) across key coffee-growing regions.
These training sessions help farmers address low levels of essential nutrients, including organic matter, potassium, nitrogen, and phosphorus, which are crucial for coffee yield and quality.
Additionally, UCDA’s efforts to register farmers and coffee buyers through a geospatial monitoring and evaluation system enhance traceability, quality assurance, and compliance with international standards.
By empowering farmers with knowledge and infrastructure, UCDA aims to ensure a sustainable coffee supply chain and build Uganda’s reputation as a producer of top-quality coffee.
A bid to boost local consumption
UCDA has been actively promoting coffee consumption within Uganda as part of its strategy to strengthen the local market.
During September, UCDA showcased coffee at various events, including the Kasese Tourism Investors Forum, the Private Sector CEO Retreat, and the Kapeka Industrial Park Expo, attracting thousands of participants.
Demonstrations of different brewing techniques, along with coffee tasting sessions, are aimed at creating a coffee culture within Uganda, which traditionally ranks low in per capita coffee consumption.
UCDA also held the “Best of Pearl Robusta” competition in September, grading 27 Robusta samples. The top-rated coffees from this competition are expected to be showcased internationally, elevating Uganda’s coffee profile on the world stage and boosting demand for its unique coffee varieties.
Economic benefits, challenges
The coffee sector remains a backbone of Uganda’s economy, supporting over 1.7 million households.
The sector’s impressive performance this year has direct implications for farmers’ incomes and rural development. However, challenges such as climate change, fluctuating global prices, and the high cost of inputs continue to affect coffee farmers’ livelihoods.
With climate change threatening yields globally, the UCDA’s promotion of climate-smart agricultural practices is timely.
In addition, the coffee authority is distributing water tanks and promoting sustainable land management techniques to mitigate climate risks and ensure a stable coffee supply in the face of unpredictable weather patterns.
Outlook, projections
For October 2024, UCDA projects coffee exports to reach 500,000 bags. With the main harvest season concluded in the Greater Masaka and South-Western regions, exporters are expected to draw from existing stocks to fulfill contractual obligations.
In regions north of the equator, where the main harvest season is just beginning, fresh supplies are anticipated, which may stabilize export volumes in the coming months.
Global coffee production for 2024/2025 is projected to increase due to recovery in Brazil and Indonesia, which could temper the supply deficit.
However, demand remains strong, especially from European and Asian markets. As a result, Uganda’s coffee sector is well-positioned to benefit from favorable prices and rising global demand.
Coffee roadmap
Uganda’s coffee sector is at a critical juncture. UCDA’s efforts to enhance production, promote local consumption, and ensure compliance with international standards are pivotal for sustained growth.
The growing market for sustainable coffee, combined with UCDA’s commitment to farmer empowerment and quality improvement, could propel Uganda’s coffee industry to new heights according to experts.
