Robusta

Out to Lunch

#OutToLunch: Financial literacy critical for farmers if Uganda is to increase coffee exports

#OutToLunch: Financial literacy critical for farmers if Uganda is to increase coffee exports By Denis Jjuuko Coffee farmers are in a good place these days. Their good fortune is not abating any time soon with fair average quality prices for Robusta still selling above the Shs13,000 mark a kilogram. In July, Uganda exported coffee worth more than USD210 million. If this trend continues, Uganda will earn a whopping USD2.5 billion by the end of the financial year. There has never been a better time to be a coffee farmer. But like all good things, there is a need to manage them. We recently heard a Member of Parliament from greater Masaka, a center of coffee growing in the country, crying out that prostitutes had invaded her area. The area is predominantly rural, where you would not easily expect to find them. The MP said that some coffee farmers, mainly men, had even lost their lives to these ‘invaders.’ The ladies of the night wanted some of this coffee money and they were keen on getting it willy-nilly. It isn’t just people peddling their flesh though responsible for some of these deaths, thieves had also attacked some people who had just sold their coffee. Although security agencies can easily deal with thieves, the challenge of how people manage their newly acquired wealth is always a challenge that needs to be addressed urgently. In Kalangala, at the onset of oil palm growing, farmers faced similar challenges. So this isn’t something that is new. When the campaign to grow coffee in Buganda started in 2016, the fair average quality price for Robusta was Shs5,000 on average. It was considered a good price prompting many people to heed the message being offered by the Kingdom of Buganda to grow coffee through their Mmwanyi Terimba campaign. The price is almost three times now, beating any commercial forecasts that may have been used to push the campaign. Although costs of inputs such as fertilizers and labour have increased over the last eight years, the money farmers are getting is still good. Many farmers are turning a profit. Even those who are not, when they sell their beans, they receive a substantial amount of money for their harvests. Many such farmers have improved their lives. Better houses are being built. Others are changing the types of roofs on their houses and others are expanding them. For many, school fees for their children won’t be a bother anymore (even though some parents have reportedly stopped their children from attending school so they work as labourers). Some have diversified their incomes, starting wholesale and retail shops. And like many Ugandans, some farmers have built rentals to earn that passive income. To ease their transport, they have bought bodas bodas and some pick up trucks. The infrastructure to dry the coffee has also improved. Even with all those investments, coffee farmers are largely still cash liquid. And many lack the skills to manage ‘huge’ sums of money. That is why the MP I mentioned earlier was appealing that prostitutes that had invaded her constituency be roughed up and sent back to the city, where they had come from. That would not solve the problem though. The farmer can simply jump on their newly acquired Bajaj and drive to the city a few kilometres away and “misbehave.” By the time they return to their farms, they would not have money to buy fertilizers and other inputs. The farms would then collapse. It is not one way though. Women with increased incomes could also, like men, abandon their roles of being mothers and wives leading to broken families. However, these may not be as many as men since men overwhelmingly own the means of production. Like all people experiencing a huge somewhat sudden surge in their incomes, there is a need to educate them on how to handle their newly acquired wealth. Financial literacy is largely lacking among some of the farmers yet there is no guarantee the prices will remain this high. The yields may also not always be high especially in these days of fluctuating weather patterns. Farmers need to manage their money better so that they can use the opportunity of these prices to create lasting wealth not just for themselves but also for the generations after them. The Uganda Coffee Development Authority could do this while partnering with other interested parties like the Kingdom of Buganda in the central region and financial institutions among others. The farmers can also collectively use the money to add value to coffee by owning milling plants, roasters or acquiring some of the assets in the coffee value chain. The writer is a communication and visibility consultant. djjuuko@gmail.com

Read More »
Out to Lunch

#OutToLunch: Coffee export good but protect farmers by consuming some of it locally

By Denis Jjuuko For a few years, coffee prices have been rising greatly crossing the Shs13,000 per kilo mark for the fair average quality or what is known as kase thereby turning many farmers into millionaires. Some of them instantly. The price of Robusta over the last few months has been almost the same as Arabica that usually grows on higher altitudes. Driving through some villages in Masaka recently, you hardly found a courtyard where coffee was not being dried. And almost everyone dried the coffee on tarpaulins instead of the bare ground of yonder. This obviously means a better-quality product and the fact that people are adhering to the messages being given to them. Farmers are also planting improved varieties and applying better farming methods all of which are leading to an improved end product that is demanded across the world. In the just concluded financial year, Uganda exported 6.13 million bags (60kg each) of coffee earning an unprecedented USD1.144 billion, an increment of 6.33% in volume and 35.29% in revenue compared to the previous year. The higher prices have been attributed to improved quality and quantity but also demand in the destination markets where coffee is consumed. Although there might be other reasons such increased local consumption in larger exporting countries like Brazil and weather fluctuations in Vietnam, and a changing environment in Europe starting in January 2025 leading to stock ups. Europe says it will only be buying coffee which is traced to farms that have not been set up after destroying forests. Most Ugandan coffee farmers are small and do so on small pieces of land and therefore no forests have been destroyed, which means the demand for our coffee in European markets should continue. Although farmers are experiencing the highest prices in 30 years, the vulnerabilities still exist and therefore Uganda’s focus should not be entirely on exports that is targeting the 20m bags annually. Local consumption is equally important. In Ethiopia, Africa’s largest coffee producer, 60% of the harvests are consumed at home. The data may be hard to come up with but imagine how many meetings especially in government ministries, departments and agencies take place on a daily basis. They must be hundreds of them. Many of them have some coffee and tea for the people to enjoy. Many officials in government have flasks of coffee and tea beside their office desks and it is not uncommon to find a few government workers enjoying breakfast or a mid-morning snack complete with a hot cup of beverages. Now, imagine if they all were drinking Ugandan coffee! How much money would the government be spending? How much money would the farmers and roasters be earning? Many times, the coffee people drink is imported instant coffees. At workshops in many hotels, imported instant coffees rule the day sometimes serving hundreds of people attending conferences and workshops. Private companies and development partners are not exceptional. In a country that is a major producer of coffee! I don’t know whether the preference of instant coffees is strategic where we prefer to export raw coffee so we can important instant ones or it is one of those things we have not clearly thought about. Should we consume some of the coffee we grow here or we should focus on exporting it only? There is no guarantee that the current prices will remain as high as they are today and if we only focus on exports, farmers at one stage may become delusional and abandon it like they did years ago. To avoid this risk, there must be ways to promote its consumption locally not through fictious campaigns that teach people how to drink coffee but through a well thought out campaign. A campaign that gets implemented. A campaign that is implemented by people that are trusted. In the central region for example, Buganda Kingdom pushed these boundaries earlier through their Mmwanyi Terimba campaign, distributing seedlings and the Katikkiro making endless drives to the expansive kingdom to see whether the people were growing coffee. The results can be seen by even a suckling baby. Government can start with its offices. Procurement officers, administrators and whoever is responsible for purchasing coffee should be aligned to the fact that charity begins at home. That they can’t be singing value addition while importing something as easy to make as coffee. Then private companies and development partners can be encouraged to go locally roasted coffee. Tax incentives could be given. This doesn’t mean that we abandon the 20 million bags target rather we do both. Improved quality and quantity would ensure that we can go ahead and get nearer to the 20 million bags target while a significant chunk is consumed at home. The writer is communication and visibility consultant. djjuuko@gmail.com

Read More »