Workers dry coffee on racks at Agri-Evolve premises. Ugandan coffee shipments are overflowing the European Union (EU) as traders scramble to get their hands on beans before
the year-end implementation of new environmental regulations. PHOTO/ FILE
Ugandan coffee shipments are overflowing the European Union (EU) as traders scramble to get their hands on beans before the year-end implementation of new environmental regulations.
Under the EU's Deforestation Regulation (EUDR), importers into the bloc will have to demonstrate that goods such as coffee, beef, cocoa, and timber do not contribute to the destruction of forest land. Many local coffee traders and farmers are, however, ill-prepared due to the lack of clarity surrounding the regulations and uncertainty about how Uganda is prepared. This, observers contend, will inevitably cause some supply disruption in the medium to the long run.
New data from both the EU and Uganda’s statistical body show that Uganda’s coffee, mostly robusta, is exchanging borders and hit an all-time high in July. Most of it was destined for the EU, a main source of income that is now in jeopardy
“Each of the other green coffee origins supplying the EU27 bloc hold a market share below 10 percent [but] Uganda seems to have consolidated its position as the third green coffee supplier to the EU27 bloc with exports consistently increasing during the past few years,” the European Coffee federation July data shows.
What exactly is at stake?
In July, Uganda exported a record 821,593 60-kilogramme bags of coffee, valued at $210.48 million (Shs777.9 billion)—a dramatic increase from the previous year mostly (55 percent) to the European Union. This surge, driven by high global prices and a push to beat the impending EU regulations, underscores the critical role coffee plays in Uganda’s economy. This is income that goes to the traders and trickles down to the local coffee farmers who are mainly rural smallholders, numbering two million per government records.
Mr Joseph Kato, who has cultivated coffee on his family’s five-acre plot in Mityana for over a decade, fears the new regulations could devastate his livelihood. As he surveys his coffee plants, he worries about potential losses that could leave his family struggling to make ends meet. He is not alone in worrying deeply.
“The EU’s regulations are a double-edged sword,” said one environmental economist. “While they aim to protect forests, they also pose a significant challenge for developing countries like Uganda, where coffee farming is a crucial economic driver.”
The bloc aims for climate neutrality by 2050, targeting products linked to deforestation. By the end of 2024, exporters to that market must prove compliance with these regulations to avoid heavy penalties. The process of mapping and tracing smallholder coffee farmers, as required by the new EU regulations, is becoming a concern. The government has yet to clarify how this will be done or provide clear timelines.
Why are most observers less sanguine about 2025?
Meanwhile, coffee exports have surged as traders and farmers seek to protect themselves from potential market uncertainty ahead of the December 31 compliance deadline. This increase in exports is not unique to Uganda—Brazil, for example, has seen a 60 percent rise in exports over the past seven months compared to last year. Roasters are welcoming this spike in supply as they prepare for potential shortages in early 2025 when the new regulations kick in.
Farmers are also taking advantage of this opportunity, knowing that their next crop, expected in October, may not meet the deadline due to processing and transit times which usually last 70 days, something that makes them eager to maximise their sales before the new rules take effect. Time seems to be running out for Uganda, especially with coffee, the country's top export, as the December 31 deadline approaches.
The EU is enforcing these standards as part of its broader European Green Deal, aimed at promoting sustainable business behaviour in its region. And by setting mandatory rules, it aims to ensure that companies meet specific requirements for responsible business and human rights.
“This legislation does not stipulate any new law or any declaration or any regulation, but it's rather the EU saying: ‘You have laws in place that speak about [the] environment, laws that speak about human rights.’ We call upon companies and businesses to be able to respect those particular pieces of legislation that you have at [the] country level,” Brenda Akankunda, the Uganda national coordinator of the International Trade Centre (ITC) explained to local media.
“So if you have a coffee plantation, the idea is that where your coffee plantation has been set, there shouldn't have been a forest as of 2020 January,” she added.
The regulation specifically targets the aforementioned commodities that are linked to deforestation, as well as products made from these commodities, like chocolate, furniture, and meat. Observers say it is poised to also affect several industries, including agriculture, retail, pharmaceuticals, and energy.
“But as much as we want to adhere to these international guidelines and regulations, they come at a very high cost for the country,” Ms Akankunda said, adding, “But also the deadline is too soon even though this was communicated to Uganda Coffee Development Authority and the Government of Uganda some time back.”
Where do we stand as we speak?
The Uganda Coffee Development Authority (UCDA) reports significant progress in raising awareness about the EU’s deforestation regulations among government officials, agencies, and industry players, with growing understanding across the board. It has also created an action plan for complying with the EUDR, outlining the necessary steps and a budget to support the process.
There are concerns, however, about the system used to prepare farmers. Currently, UCDA is relying on an internal system to map farmers. Insiders worry that this may not be enough to cover the 1.8 to 2.0 million coffee farmers in Uganda. The system, initially designed for planning and monitoring extension services, lacks the extensive coverage required to meet the EUDR’s demands within the tight timeline.
“Compliance means that we must be able to trace our coffee from farm and registration of farmers or mapping of farmers is a precursor. This means you have a national database or a national coffee register. If you have that, then you are one stage away from compliance. So the system [we have] actually does mapping of farms,” said Gerald Kyalo, UCDA’s director of development services.
Evidently, there is a numbers gap in that system because only about 30,000 farmers have been added. Mr Kyalo believes that "with the timeline we have, we perhaps need to call in place other systems to complement or supplement these efforts" because between 60 and 70 percent of the nation's coffee is exported to the European Union, which is concerning to exporters.
ITC points out that while the EU’s deforestation regulations mainly target exporters and value chain operators entering the EU market, the impact extends beyond them and that the ripple effect reaches even the government, as reduced trade or revenue impacts the country’s economy.
Of those players in the value chain, who have been met and who have not?
UCDA has not yet engaged with many farmers outside Kampala, who are most vulnerable if their coffee beans fail to meet EU market standards. While the new legislation will affect all industry players, these rural farmers are at greater risk.
"We haven’t reached the level we want yet. We need to engage farmers at the grassroots, at the sub-county level, and speak to them directly," said Mr Kyalo.
He also conceded that while some farmers, especially those with access to smartphones or the Internet, can visit the Coffee House or check online to understand the EUDR, many others still need in-person guidance.
UCDA is struggling with inadequate funding for traceability measures, Saturday Monitor has leant. While the agency has engaged Parliament and presented its budget to the National Planning Authority, the Finance minister, and the House Agriculture Committee, the funds allocated have fallen short. UCDA requested Shs35.5 billion to support mapping and traceability of farmers, but only received Shs13.9 billion.
Uganda could have avoided some of these challenges had the EU accepted its proposed short-term solution—a territorial approach. This plan aimed to assure the EU upfront that it would be mapping the entire country, identify “red zones” where coffee is grown on deforested land, and prevent such coffee from entering the European market. The EU authorities, however, rejected this proposal, insisting on full traceability. Uganda is now required to trace the origin of its coffee and ensure compliance with EU regulations before any of its coffee beans hits that bloc’s market in the first quarter of 2025.
A man pick coffee beans. UCDA has not yet engaged with many farmers outside Kampala, who are most vulnerable if their coffee beans fail to meet EU market standards.
So what ought to be done?
“To achieve traceability, we need two key components,” says Mr Kyalo. “First, the National Coffee Register, which involves mapping every farmer’s garden. For farms of 10 acres or more, we need a polygon map—an accurate map of the entire garden. For farms smaller than 10 acres, we need to provide the GPS location, even down to a single tree. This is the standard the European Union requires for coffee exports."
While the plan appears solid, many economists believe Uganda is unlikely to achieve 100 percent compliance by December 31. The government also shares this concern. An official from UCDA acknowledged thus: “While we may not achieve 100 percent compliance by the deadline, we aim to have a majority of farmers mapped by January 2025.”
This suggests that many farmers might miss the deadline, potentially losing out on earnings, which could have broader consequences for the country. With coffee being Uganda’s largest source of foreign exchange, this shortfall could perhaps bring on a dollar shortage in the country and affect the shilling’s stability.
The EU remains firm on its deforestation regulation, citing global analysis that shows coffee contributes around seven percent to global deforestation. Ugandan authorities, however, argue that coffee is not a significant driver of deforestation in its country. The challenge, though, lies in proving this claim, as they lack sufficient evidence, which could potentially be provided through comprehensive mapping.
The EU’s regulation does not consider agroforestry, a practice Uganda uses for sustainable coffee production. ITC says that while agroforestry may improve production processes within Uganda, it won’t provide any leverage with the EU authorities in seeking regulatory relief.
"We need collective efforts from the government, private sector, and development partners," said Ms Akankunda, emphasising that an action plan for this cause is already in place, focusing on two key areas: raising awareness and ensuring the necessary tools are available.
She pointed out that based on UCDA's territorial approach, Uganda is 99.5 percent compliant with the EU’s regulations, but the challenge lies in providing proof.
"This is a large-scale issue that requires significant resources," she said, because meeting these requirements would require secure data management and effective systems.
While many multinational companies already have traceability systems in place to protect their supply chains, the concern is about supporting local companies that lack these resources. Co-investment and collaboration among companies, international organisations, and government are essential to avoid duplicating efforts and ensure Uganda can move forward collectively, she said, adding that putting all resources into a unified effort would prevent fragmented progress and maximise the impact of the compliance strategy.
Ms Akankunda highlighted a targeted approach for the upcoming coffee season, running from September to December.
"If we can tell which communities will be harvesting during this period, and UCDA already has this data," she said, these can be given priority in the collecting and mapping data drive to ease the compliance of local farmers and minimise the risk of being affected by the new regulations.
UCDA’s main priority now is to establish a fully functional traceability system and ensure that all farmers' plots are mapped. This task is particularly challenging due to limited resources, making it an aggressive and difficult undertaking at this time unless a supplementary budget is passed for this cause. While any such move needs to be fast-tracked, there have not been such talks in the August House.
The government acknowledges that it is receiving increased support from the private sector and some funding partners, albeit deficient, to close the financing gap it currently faces in this regard.
“We are certain that Ugandan coffee will access [the] EU market come first January 2025. Definitely we would like to have as many efforts towards funding as possible. We are still encouraging farmers to plant coffee. The demand is extremely high and the prices have been very good so there are a lot of drivers pointing to coffee as quite a critical crop,” said Mr Kyalo.
Many trade experts, however, believe the cost of compliance may affect farmers' income, potentially shrinking the margins they get from their coffee sales. One major concern and a factor to this is how Uganda is classified by the EU. It is currently considered a low-risk country regarding coffee’s contribution to deforestation.
"If we were classified as a high-risk country, the compliance measures would be much stricter," Ms Akankunda said.
Why does Uganda find itself in the position in which it is?
Despite the EU regulations being established in 2022 and formally passed on June 29, 2023, Uganda still lacks the specific regulations needed to meet these directives. As of August, no regulations have been implemented to ensure that Ugandan coffee remains eligible for the EU market.
The country’s Coffee Act does not include provisions for traceability, despite being required by the EU.
This raises concerns that this gap could slow down the pace at which efforts to increase compliance are being made.
This issue can be addressed through new regulations under the National Coffee Act of 2021, which empowers the minister to develop them, but hasn’t. Many experts therefore worry that Uganda may lose access to the EU market due to the new regulations, although China could become a viable alternative. However, competition for the Chinese market is fierce, as many countries are also seeking to sell their coffee there.
As Uganda faces the deadline for compliance with the EU’s deforestation regulations, the future of its coffee industry hangs in the balance. The outcome will not only determine the fate of millions of farmers but also set a precedent for how developing nations adapt to global environmental standards.
