A Value Chain Analysis of Uganda’s Coffee Industry

Abstract

Uganda is one of the largest producing and exporting countries of coffee in the world and second in Africa after Ethiopia. Because of the importance of coffee to Uganda as a country, this research report attempts to investigate the value added to coffee at each stage from production to consumption. In the coffee value chain, coffee beans go through different processes before they reach the hands of a consumer. The study analyzed the value chain of the coffee industry in Uganda using descriptive and graphical analysis using the available documented information such as UCDA monthly and annual reports and other publications, identified the roles of the different actors and examined constraints and opportunities within the coffee value chain in Uganda in order to prescribe possible solutions to constraints. The results indicated that Uganda’s coffee value chain has no international presence as a result of exporters selling green bean to international markets who do most of the final processing with minimal roasting done in Uganda. The chain is majorly composed of farmers, the local and regional intermediaries, associations, processors (hullers and wet millers), exporting firms, local roasting firms and cafes but with no international level actors such as coffee traders and the roasters. Constraints identified in the chain include poor quality production, price fluctuations, financial constraints and limited bargaining power in international market among others. To make the coffee producers competitive both locally and in the global value chain, the Government should actively participate and encourage smallholder farmers to form cooperatives in order to increase the bargaining power of Ugandan coffee farmers. This will result into competitive prices for their coffee and minimize exploitation by middlemen, as well as ensure the quality of coffee supplied to the markets. In addition, the strategy of promoting commercial coffee production in the non-traditional coffee areas through creating a sustained demand-driven initiative in the production of coffee seedlings, both using elite seed and vegetative cuttings should be implemented.