Coffee Annual Report

An Expert's View about Tree and Bush Fruits and Nuts in Uganda

Posted on: 27 May 2012

The recent record-high Robusta bean prices have permitted Ugandan producers to buy additional inputs.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 5/22/2012 GAIN Report Number: Uganda Coffee Annual Uganda Coffee Annual Report Approved By: Stephen Hammond Prepared By: FAS/Nairobi Staff Report Highlights: Europe will likely remain the most important importer of Ugandan Robusta and Arabica coffees. The most recent export data indicate that Europe imports about 80 percent of the Robusta and 90 percent of Ugandan Arabica production. Neighboring South Sudan will likely remain the only other major market for Uganda’s Robusta coffee, importing almost all of the remaining 20 percent of Ugandan Robusta exports. Executive Summary: Ugandan Arabica coffee farmers around the foot hills of Mt. Elgon, produce with similar soils, climates and daylight hours as the Kenyan Arabica coffee producers, whereas Ugandan Robusta coffee farmers produce at lower elevations around Lake Victoria. Europeans appreciate these production credentials, importing about 80 percent of all Ugandan coffee. The recent record-high Robusta bean prices have permitted Ugandan producers to buy additional inputs, subsequently improving production and export prospects for Marketing Year (MY) 2012 and 2013. MY 2013 Robusta production will likely approach three million 60 kilogram bags. Even though fertilizer and other input prices in Uganda remain historically high, Ugandan Robusta profit potential has encouraged growers to take the risk associated with additional inputs. The Robusta prices peaked at record levels at about the same time Arabica bean values peaked but at a much lower 45 percent of Arabica values (please see price charts in the body of this report). Coffee exports play a major role in Uganda’s economy, contributing up to about 30 percent of Uganda’s foreign exchange earnings and employing directly and indirectly more than 3.5 million Ugandans. Small-scale producers with less than three hectares of land produce about 90 percent of Uganda’s coffee. The Government of Uganda (GOU) opened the sector to privatization in 1991 and the goals within the industry to modernize and replace old and diseased trees remain the same. This report reflects the analysis and opinions of the FAS/Nairobi Office of Agricultural Affairs and does not necessarily represent the views or opinions of the U.S. Department of Agriculture in Washington, D.C. Production: Uganda Coffee--FAS/Nairobi 2009 2010 2011* 2012* 2013* Beginning Stocks (1000 60 KG BAGS) 561 641 701 613 593 Arabica Production (1000 60 KG BAGS) 650 818 644 630 650 Robusta Production (1000 60 KG BAGS) 2,610 2,052 2,568 2,700 2,800 Total Production (1000 60 KG BAGS) 3,260 2,870 3,212 3,330 3,450 Total Supply (1000 60 KG BAGS) 3,821 3,511 3,913 3,943 4,043 Bean Exports (1000 60 KG BAGS) 3,050 2,670 3,150 3,200 3,400 Total Exports (1000 60 KG BAGS) 3,050 2,670 3,150 3,200 3,400 Rst,Ground Dom. Consum (1000 60 KG BAGS) 130 140 150 150 150 Domestic Use (1000 60 KG BAGS) 130 140 150 150 150 Ending Stocks (1000 60 KG BAGS) 641 701 613 593 493 Total Distribution (1000 60 KG BAGS) 3,821 3,511 3,913 3,943 4,043 Uganda Coffee Development Authority (UCDA) estimates—*FAS/Nairobi estimates and forecasts From the Uganda Coffee Development Authority Website, please note the harvest periods for Robusta and Arabica coffees. Ugandan Coffee Harvest Periods Source: http://www.ugandacoffee.org/index.php?page&a=16 Ugandans claim that Robusta coffee originated in the Victoria Lake region and that the Arabia coffee was first introduced to Uganda from neighboring Ethiopia. The Robusta coffee trees thrive below 1,500 meters, while Arabica bushes produce on the foothills of Mt. Elgon, above 1,500 meters in elevation. Reportedly, Ugandan Robusta producers are holding out hope for a new Arabica variety developed in Papua New Guinea called “Tuzza” that thrives at the lower elevations commonly populated by Robusta trees. They see greater profit potential from this higher yielding and higher value (when compared to Robusta) coffee. Consumption: Ugandans, like their east African neighbors, prefer tea and other beverages to coffee. As a result, Ugandan producers depend on the volatile export market for their livelihoods. Trade: As previously noted, Ugandans export their domestic coffee production, mostly to Europe. They are at a further farm-gate price disadvantage to many Kenyan producers, because they also bear the brunt of higher freight costs to position Ugandan coffee at the Port of Mombasa, Kenya, the most-commonly used port of export. Uganda MY 2011 Coffee Exports Robusta Arabica Robusta + Arabica Destination Exports Export Exports Export Exports 60 Kg bags Bags Share Bags Share Total Bags Share Total 2,484,013 100% 665,410 100% 3,149,423 100% Europe* 1,894,794 76.28% 591,122 88.84% 2,485,916 78.93% Sudan 453,902 18.27% 6,130 0.92% 460,032 14.61% U.S.A. 49,314 1.99% 45,854 6.89% 95,168 3.02% Russia 18,896 0.76% 7,384 1.11% 26,280 0.83% Israel 22,764 0.92% 977 0.15% 23,741 0.75% Egypt 9,576 0.39% 900 0.14% 10,476 0.33% Australia 3,085 0.12% 6,285 0.94% 9,370 0.30% Algeria 9,352 0.38% 0 0.00% 9,352 0.30% Kenya 6,971 0.28% 1,590 0.24% 8,561 0.27% Morocco 5,660 0.23% 2,240 0.34% 7,900 0.25% Japan 4,897 0.20% 1,040 0.16% 5,937 0.19% Canada 4,162 0.17% 1,220 0.18% 5,382 0.17% Singapore 0.00% 668 0.10% 668 0.02% Hong-Kong 640 0.03% 0 0.00% 640 0.02% *EU Member States+ Switzerland Policy: The UCDA reports that coffee policy hasn’t change over the last 20 years. From their Website: “The recent Government strategy has mainly been coffee replanting in Coffee Wilt Disease, (CWD) affected areas, replacement of the aged unproductive trees and supporting introduction of commercial coffee production in new areas of Northern, North Eastern Uganda and the districts of Kisoro and Kabale. Enhancement of coffee productivity at farm level is also being done in order to ensure improvement in coffee farmers’ household income. The Coffee Production campaign 2006-2015 spearheaded by UCDA and Café Africa is also geared at replacing the acreage lost due to diseases including CWD. In this respect, two stakeholders' meetings were held in June and September 2006 to address the declining coffee volumes. Four thematic areas being addressed in the campaign are: Research; Extension; Inputs and Credit and Farmer Organizations.” Prices Please note the abovementioned prices in the charts here below: Arabica Robusta 80% 400 70% 350 6 % 300 250 50% 200 4 % 150 30% 100 20% 50 10% 0 Arabica vs. Robusta Coffee Prices $/60 Kg 0% Ro 8 0 2 4 6 8 0 2busta Coffee Prices as a percent of Arabica Coffee Prices 9 0 0 0 0 0 1 1 9 0 0 0 0 0 0 0 1 8 2 0 2 2 2 4 2 6 2 8 2 0 2 2 9 0 0 0 0 0 1 1 9 0 0 0 0 0 0 0 New York Market 1 2 2 2 2 2 2 2 New York Market Arabica Robusta 1.00 0.90 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00 Arabica vs. Robusta Coffee Prices in Ugandan Shillings (Ugx) Million Ugx/60 Kg 8 0 2 4 6 8 0 2 9 0 0 0 0 0 1 1 9 0 0 0 0 0 0 0 1 2 2 2 2 2 2 2 New York Market--Oanda Historical Ex Rates
Posted: 27 May 2012

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