Coffee shake-up: Uganda’s biggest gamble

Uganda's coffee industry faces a pivotal moment as Parliament deliberates on the National Coffee (Amendment) Bill 2024, which proposes to dissolve the Uganda Coffee Development Authority (UCDA) and integrate its functions into the Ministry of Agriculture. 

The move, part of the government's broader rationalization policy, has sparked intense debate about the future of the country's leading export commodity.

The Bill, presented by Agriculture Minister Frank Tumwebaze, aims to streamline operations and reduce administrative costs under the Government Policy for Rationalisation of Government Agencies and Public Expenditure (RAPEX). However, stakeholders across the sector have expressed mixed reactions about its potential impact on Uganda's coffee industry, which currently employs over 1.7 million households.

Global Position and Regional Impact.

As Africa's largest coffee exporter, Uganda shipped approximately 6.26 million 60-kg bags in 2023, generating around $900 million in export earnings. However, this output still trails significantly behind global leaders: Brazil produces 55 million bags annually, Vietnam 29 million, and Colombia 14 million. Within East Africa, Uganda maintains a leading position ahead of Ethiopia (7.5 million bags), while Kenya and Tanzania produce significantly less at 700,000 and 800,000 bags respectively.

The proposed changes present both opportunities and challenges. On the positive side, the reform could reduce administrative costs by an estimated Shs15-20 billion annually, potentially redirecting these funds to farmer support programs and research. The integration with the Ministry might also improve coordination with other agricultural initiatives.

However, industry experts have raised concerns about potential drawbacks. 

That "While cost-saving is important, we must preserve UCDA's institutional knowledge and specialised focus." The Uganda Coffee Federation echoes these concerns, particularly regarding quality control systems and market access initiatives.

The practical implementation faces several hurdles. Over 400 UCDA employees will be affected, requiring either redeployment within public service or terminal benefits payment. 

The transition must also ensure the continuation of quality control systems and maintain international certifications crucial for market access.

In the best-case scenario, the reform could create a more efficient, cost-effective structure while maintaining Uganda's strong market position. The worst case could see bureaucratic delays, reduced quality control, and diminished international buyer confidence affecting the sector's performance.

Success will depend on several critical factors:

Maintaining specialized coffee sector expertise

Preserving international partnerships

Protecting farmer interests

Continuing research and development programmes

Safeguarding Uganda's global market position

The reform aims to address institutional inefficiencies while reducing public expenditure. However, careful implementation will be crucial to protect the interests of coffee-farming households and maintain Uganda's position in the global coffee market and the primary concern should be maintaining the robust systems that have built Uganda's reputation in global markets.

As Parliament continues to debate this crucial amendment, the future of Uganda's coffee sector hangs in the balance. 

The success of this transition will largely depend on how effectively the Ministry of Agriculture can maintain UCDA's specialized focus while achieving the desired efficiency gains. With coffee remaining Uganda's leading export commodity, the stakes couldn't be higher for the country's economic future.

Dean Natukunda, [email protected]