The National Coffee Project must negotiate new trade agreements
In 1989-1990, Uganda had a windfall of coffee. Nearly a billion dollars in export earnings. The government, excited by this windfall caused by the frost in Brazil, levied a “coffee stabilization” tax whose purpose was to support farmers when prices were not favourable.
This windfall did not last long and the next two decades were marked by a precipitous collapse of almost all the cooperative unions, East Mengo, West Mengo, Buddu Growers, Banyankore Kweterana, Nyakatonzi and Busoga.
The former giant Ministry of Cooperatives and Marketing led by economists – Yonasani Kanyomozi (1981-1985), John Sebaana Kizito (1985-1989) was integrated into a department of the Ministry of Commerce which saw its own share of woes in hastily implementing liberalization reforms collapsed national enterprises.
Since that time, Uganda’s capital journey has taken a particular path, with foreign capital merging with domestic agents [Ugandan businessmen in association with a select political class].
The end result are remarkable mansions dotting the countryside, gated farms and Mcmansions competing for space in the Kampala metropolitan area where 70% of GDP resides.
In 2010, the weak coffee sub-sector still directly supported five million Ugandans in the 88 coffee districts as their main source of income.
Coffee is a sustainable land use, it does not have the prohibitive land use characteristics of other monoculture activities such as oil palm, cotton or large scale livestock.
Farmers can grow coffee and food at the same time in intercropped gardens if they wish. The colonialists favored this approach because it ensured that the coffee shambas had enough manpower, as the farmers actually grew food in the coffee gardens.
The Ugandan coffee problem in which lies; it was that he became the victim of a temporary success that attracted tax authorities, speculators and vested interests. In the last five years, someone came up with an innovative idea to tax fishmouth.
A tax was imposed on fishmouth, a lucrative business; fish maw is valued as a tissue repair product and in plastic surgery to alleviate severe burns.
Simultaneously, the waters of Lake Victoria were flooded with trawlers and in November 2020-January 2021 the waters of the lake were floating with dead Nile perch. The Department of Fisheries offered a weak excuse that the “Nile perch” had contracted a strange disease. Since that time, the Nile perch introduced by the first government of Milton Obote in 1967-1970, the predator of the lake has disappeared.
Tilapia stocks have recovered somewhat, but the price of the fish is out of reach for most Lake Victoria fishing communities.
In the coffee debate, understanding the strengths and weaknesses of our national export can suffer from the same problem. Are we outsourcing a national resource by favoring a processor? Are we tackling the robusta problem, producing at low prices for world markets, leaving our farmers in crushing poverty? The current situation where the coffee industry is under the firm grip of foreign players who have bought up the premises has been the response to the government’s inability to mobilize ‘harvest financing’. In fact, local businesses trying to navigate the vagaries of the cash-intensive coffee trade can do little by offering credit terms in a cash economy.
In 2020-2030, commodity pricing is impossible except through state monopoly or collusion of dominant market players. Both of these approaches risk ending in tears.
In 2008, Rwanda, a much smaller coffee producer producing highly sought-after Kivu Arabicas, entered the US market by entering into coffee production agreements with American coffee houses. Uganda has similar kidnapping agreements in Egypt, China and Denmark. The Chinese arrangement is the most promising because of its promise of exponential growth. The Germans established themselves in Kaweri focusing on washed robustas, a capital intensive operation as hand washers are difficult to operate in robusta areas due to the different screen sizes in the robusta trees.
In fact, none of the seven wet coffee grinders [some of which went to politicians] imported from Brazil are operational in the robusta zones. Any successful coffee strategy must inevitably involve the EU, long a major donor in the coffee sector enabling Uganda to participate further down the value chain in an important market setting up processing and distribution capacities. . This will mitigate the excess net resource outflows, the legacy of the colonial era and the neo-colonial era fostered by the current situation and policy. At one point, the United States was convinced to offer “most favored nation status” to strategic enemies like Russia, allowing them to build agricultural juggernauts shaking American farmers to the core. This is the challenge and the frank exchange of ideas that the Ugandan Ministry of Commerce must have with the Europeans. In 2020, real politics has replaced idealism.