One of the provisions of the agreement between the Uganda Vinci Coffee Company Limited (UVCCL) and the government is that the former will undertake coffee processing activities such as roast, ground and instant coffee, coffee capsules and all other complementary product.
Although the agreement does not obligate UVCL to export the value-added coffee, it is hoped that this will lead to the export of value-added coffee to ‘lucrative’ markets in Europe, America and the Middle East.
The narrative holds that as a result, Uganda’s coffee revenues will increase from $657.23 million recorded in 2021 to $5.4 billion annually.
While the theory behind this narrative is admirable, it appears that the government does not recognize or appreciate the reality in which such a theory is rooted.
Indeed, believing that there will be a market for value-added Ugandan coffee is like believing that Santa Claus exists! Indeed, these “lucrative markets” aggressively dominate and protect the upper coffee chain that Uganda is trying to enter.
Uganda’s main export destinations for green coffee beans are Italy, Germany, USA, Sudan and Spain. While other export destinations include Kenya, Algeria, South Africa, Egypt and Morocco, Europe accounts for 75 percent of Uganda’s coffee exports.
We should understand the intentions behind Europe’s dominance over imports of green coffee beans from Uganda. Europe is home to the largest coffee roasting industry in the world. Indeed, Germany and Italy have the largest roasting industry, followed by Spain, the Netherlands, France and Sweden.
According to the 2021 Coffee Barometer conducted by Oxfam Belgium, major toasters like Nestlé, JDE Peet’s End 2019, Lavazza and Starbucks are responsible for roasting 35% of the world’s coffee. In 2019, Nestlé and Starbucks had sales worth $19.5 billion and $16 billion, respectively. JDE Peet’s End 2019, a German coffee roaster, launched in 2019 was able to sell $8.7 billion in the same year.
In addition, a coffee cartel is thriving in Switzerland under the aegis of the Swiss Coffee Trade Association (SCTA) and manages a volume of over 50% of world coffee exports. SCTA members typically purchase future coffee contracts from suppliers overseas and resell them to customers who are also overseas. Therefore, maintaining access to this important raw material to keep coffee roasters, grinders and their more than 343,815 coffee shops and 20,591 coffee-focused stores afloat is essential for their survival, any coffee export external added value is avoided.
It is no surprise that Neumann Kaffee Gruppe, the world’s leading green coffee service group domiciled in Hamburg, Germany, with the help of the state apparatus, established the controversial Kaweri coffee plantation in Uganda in 2001, for the sole purpose of ensuring a stable supply of green coffee beans from Uganda.
Even initiatives like fair trade have focused on raising agricultural prices for coffee growers rather than the value of coffee exports, as the latter would interfere in the coffee empire and cartel. So, while European and American markets may be available for Uganda’s value-added coffee, they are not accessible. Availability and market access are different.
However, all is not lost. There is great untapped potential in national, regional and continental markets. Nurturing a culture of coffee drinking among Ugandans can, for example, stimulate an increase in domestic consumption of the drink. We can learn lessons from Ethiopia which consumes more than 55% of its coffee domestically.
According to the International Coffee Organization, the per capita coffee consumption in Ethiopia in 2020 was 3 kg compared to Uganda which is less than 1 kg. Strategies like BUBU should be used to promote the consumption of local coffee brands rather than Nescafé which adorns the majority of Ugandan hotel coffee tables.
The role of institutions such as the Uganda National Bureau of Statistics and coffee cooperatives in ensuring standards, awareness, branding and publicity cannot be overstated in this equation.
Mr. Africa Kiiza is a PhD student at the Universität Hamburg