Uganda`s Coffee Risks rejection in European Markets
Plans by major European coffee buyers to increase purchases of certified coffee could lock out most of Uganda’s exports, as the local industry struggles with high certification costs.
The European Union Sustainable Certified Coffee Initiative, a quality control tool, compels coffee buyers and roasters operating within the bloc to buy coffee beans that bear documentation on geographical source, producers’ name, quality indicators and a summary of farm inputs applied on them.
European-based coffee buyers have raised the volumes of certified beans they buy from an overall share of eight per cent to 25 per cent by end of 2019, as more producers comply with the requirement.
However, the move may block exports from less sophisticated coffee-producing countries, according to Ameet Morjaria, a researcher at the Northwestern University in Chicago, US.
About 62 per cent of Uganda’s coffee is exported to Switzerland — a major commodity trading hub — and other EU states. But only 2 per cent of the country’s coffee output is certified.
The product certification fees charged by the EU is prohibitive to ordinary coffee farmers, with each certification exercise costing more than 11,000 euros ($11,695), industry sources say.
Industry players say product certification measures amount to non-tariff barriers meant to deny market access to goods originating from targeted countries. But economists argue these measures are vital for tracing quality-related problems in the production value chain.
“Costs of certification are almost equal or higher than the incomes earned by coffee farmers. For instance, certification costs of 20,000 ($21,263)-30,000 euros ($31,895) could equal total export revenues earned by small farmer groups. It is time for us to refocus our energies on local and regional markets instead of restrictive Western markets,” said chairman of Good African Coffee Ltd, Andrew Magezi Rugasira.
Local economists believe closer partnerships between large coffee buyers and coffee farms could minimise the burden of certification costs.
“Government should encourage big players like Good African Coffee to partner with small coffee farms through aggregation,” said Isaac Shinyekwa, a research fellow at the Economic Policy Research Centre.
Between November 2014 and October 2015, Uganda’s coffee exports yielded $403 million while total volumes were estimated at 3.454 million 60 kilogramme bags, at average market prices of $1.96 per kilogramme, Bank of Uganda data show.
In comparison, coffee export earnings dropped to $328 million between November 2015 and October 2016 while total volumes also declined to 3.3 million 60 kilogramme bags. Average market prices were estimated at $1.67 per kilogramme, the data showed.
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