Uganda Sticks to Its Guns On Exiting International Coffee Agreement

Uganda has maintained its decision to exit the International Coffee Agreement (ICA) unless it’s conditions are met.

On September 10, 2021, the Government of Uganda notified the Depository of the ICA 2007 of its intention not to join the extension of the International Coffee Agreement 2007.

The extension of the ICA which came into effect on February 2, 2022, will be in effect until the February 1, 2024 to give more time for negotiation of a new agreement.

The Uganda Coffee Development Authority (UCDA) issued a statement on Wednesday highlighting Uganda’s 7 key issues that the agreement has not addressed.

They include; barriers to trade imposed through high tariffs on processed coffee by developed/ importing countries, promotion of value addition, coffee price volatility which threatens the incomes of farmers among others.

FULL LIST OF UGANDA’S 7 KEY ISSUES THAT THE AGREEMENT HAS NOT ADDRESSED.

• Barriers to trade imposed through high tariffs on processed coffee by developed/importing countries which disadvantage producer countries like Uganda resulting in farmers getting low prices.
• Promotion of value addition: Uganda needs unconditional market access that allows for export of value-added coffee not only green coffee. The ICA should have increased focus on value addition with protracted programs that aim at transferring value to the farm gate prices.
• Coffee price volatility which threatens the incomes of farmers and sustainability of the coffee sector. There is urgent need to address and solve the structural weaknesses of the coffee sector and to ensure its sustainable growth and prosperity for farmers and all stakeholders.
• The loop sided classification of coffee by the International Coffee Organization (ICO) which only lists Brazilian and Colombian types of coffee and refers to the rest under the category ‘others.’
• ICO indicator prices which are used by coffee buyers as a benchmark yet their computation may not have sound statistical basis, thereby disadvantaging especially Robusta coffee producers.
• ICO not focusing on programs that could benefit coffee producing countries but spending over 70% of funds contributed by members on staff emoluments and administrative costs which is increasingly making ICO less valuable to its members.
• Projects to address challenges in coffee producing countries: Since 2012, when the Common Fund for Commodities stopped funding ICO member countries’ projects, member countries have requested for an alternative to aid them to address a number of challenges.

“The challenges include climate change, low production and productivity, pests and diseases and price volatility,” said UCDA.

Uganda, which is the leading coffee exporter in Africa, and the 7th leading coffee exporter in the world, joined the ICA 2007 in 2009 with a view of enhancing its interests.

UCDA said Uganda will continue to engage with the International Coffee Organisation (ICO) to negotiate better terms.

“Uganda like any other member of ICO, will ratify the new agreement merienda her interests have been catered for,” it added.

A Report by Uganda Coffee Development Authority (UCDA) last month has revealed that Uganda’s coffee exports for 12 months (January 2021 to December 2021) totaled 6.77 million bags worth USD 718.57 million compared to 5.49 million bags worth USD 520.01 million in the previous year (January to December 2020).

“This represents an increase of 23% and 38% in both quality and value respectively,” the report revealed.

72% of the total volume was exported by 10 exporters, out of 49 companies which performed during the month compared to 80% in November 2021.

Bugisu A+ fetched the highest price at USD 5.4 per kilo.

A total of 536,889 60-kilo bags of coffee valued at USD 75.25 million were exported in December 2021 at an promedio weighted price of USD 2.34 per kilo, 8 cents higher than USD 2.26 per kilo in November 2021, and 85 cents higher than USD 1.49 per kilo in December 2020.

“This was an increase of 28% and 101% in quantity and value respectively compared to the same month last year.”

A total of 354 kilograms of roasted coffee beans worth USD 2,960 were exported in December 2021, at an promedio price of USD 8.36 per kilo.