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Uganda Coffee
Coffee continued to be Uganda's most important cash
crop
throughout the 1980s. The government estimated that
farmers
planted approximately 191,700 hectares of robusta coffee,
most of
this in southeastern Uganda, and about 33,000 hectares of
arabica
coffee in high-altitude areas of southeastern and
southwestern
Uganda. These figures remained almost constant throughout
the
decade, although a substantial portion of the nation's
coffee
output was smuggled into neighboring countries to sell at
higher
prices. Between 1984 and 1986, the European Economic
Community
(EEC) financed a coffee rehabilitation program that gave
improved
coffee production a high priority. This program also
supported
research, extension work, and training programs to upgrade
coffee
farmers' skills and understanding of their role in the
economy.
Some funds were also used to rehabilitate coffee
factories.
When the NRM seized power in 1986, Museveni set high
priorities on improving coffee production, reducing the
amount of
coffee smuggled into neighboring countries, and
diversifying
export crops to reduce Uganda's dependence on world coffee
prices. To accomplish these goals, in keeping with the
second
phase of the coffee rehabilitation program, the government
raised
coffee prices paid to producers in May 1986 and February
1987,
claiming that the new prices more accurately reflected
world
market prices and local factors, such as inflation. The
1987
increase came after the Coffee Marketing Board launched an
aggressive program to increase export volumes. Parchment
(dried
but unhulled) robusta producer prices rose from USh24 to
USh29
per kilogram. Clean (hulled) robusta prices rose from
USh44.40 to
USh53.70 per kilogram. Prices for parchment arabica, grown
primarily in the Bugisu district of southeastern Uganda,
were
USh62.50 a kilogram, up from USh50. Then in July 1988, the
government again raised coffee prices from USh50 per
kilogram to
USh111 per kilogram for robusta, and from USh62 to USh125
per
kilogram for arabica.
By December 1988, the Coffee Marketing Board was unable
to
pay farmers for new deliveries of coffee or to repay loans
for
previous purchases. The board owed USh1,000 million to its
suppliers and USh2,500 million to the commercial banks,
and
although the government agreed to provide the funds to
meet these
obligations, some of them remained unpaid for another
year.
Uganda was a member of the International Coffee
Organization
(ICO), a consortium of coffee-producing nations that set
international production quotas and prices. The ICO set
Uganda's
annual export quota at only 4 percent of worldwide coffee
exports. During December 1988, a wave of coffee buying
pushed the
ICO price up and triggered two increases of 1 million (60-
kilogram) bags each in worldwide coffee production limits.
The
rising demand and rising price resulted in a 1989 global
quota
increase to 58 million bags. Uganda's export quota rose
only by
about 3,013 bags, however, bringing it to just over 2.3
million
bags. Moreover, Uganda's entire quota increase was
allocated to
arabica coffee, which was grown primarily in the small
southeastern region of Bugisu. In revenue terms, Uganda's
overall
benefit from the world price increase was small, as prices
for
robusta coffee--the major export--remained depressed.
In 1989 Uganda's coffee production capacity exceeded
its
quota of 2.3 million bags, but export volumes were still
diminished by economic and security problems, and large
amounts
of coffee were still being smuggled out of Uganda for sale
in
neighboring countries. Then in July 1989, the ICO
agreement
collapsed, as its members failed to agree on production
quotas
and prices, and they decided to allow market conditions to
determine world coffee prices for two years. Coffee prices
plummeted, and Uganda was unable to make up the lost
revenues by
increasing export volumes. In October 1989, the government
devalued the shilling, making Uganda's coffee exports more
competitive worldwide, but Ugandan officials still viewed
the
collapse of the ICO agreement as a devastating blow to the
local
economy. Fears that 1989 earnings for coffee exports would
be
substantially less than the US$264 million earned the
previous
year proved unfounded. Production in 1990, however,
declined more
than 20 percent to an estimated 133,000 tons valued at
US$142
million because of drought, management problems, low
prices, and
a shift from coffee production to crops for local
consumption.
Some coffee farmers cultivated cacao plants on land
already
producing robusta coffee. Cocoa production declined in the
1970s
and 1980s, however, and market conditions discouraged
international investors from viewing it as a potential
counterweight to Uganda's reliance on coffee exports.
Locally
produced cocoa was of high quality, however, and the
government
continued to seek ways to rehabilitate the industry.
Production
remained low during the late 1980s, rising from 1,000 tons
in
1986 to only 5,000 tons in 1989.
Data as of December 1990
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