Govt earmarks sh13.9b to fast-track EU coffee regulation compliance

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The finance ministry says the Government will issue the release sh13.967b to the Uganda Coffee Development Authority (UCDA) on October 9, 2024.

The funds are intended to expedite Uganda's compliance with the European Union's Deforestation Regulation (EUDR), a critical requirement for continued coffee exports to the EU.

State Minister for Finance in charge of General Duties, Henry Musasizi, (Rubanda County East, NRM) confirmed that once the funds are released, UCDA will be expected to access the allocation by October 20, 2024, to accelerate efforts towards EUDR compliance.

Musasizi was speaking to the parliamentary committee on agriculture, animal industry, and fisheries, regarding concerns raised by the Southern and Eastern Africa Trade Information and Negotiation Institute (SEATINI) on October 8, 2024.

SEATINI’s petition highlighted the Government's perceived lack of preparedness in meeting the stringent EUDR requirements.

The petition prompted a deeper inquiry into Uganda's efforts to comply with the regulation, which could have significant implications for the country’s coffee exports to the EU.

SEATINI’s petition pointed out that Uganda’s readiness for the EUDR is far from adequate. The EUDR, which seeks to ensure that products imported into the EU, including coffee, are free from deforestation links, has strict requirements.

Non-compliance could result in Uganda losing access to the EU market, which accounts for 63% of the country’s coffee exports, according to the finance ministry.

The agriculture committee, chaired by Hope Grania Nakazibwe, emphasized the urgency of the release and acknowledged that the UCDA had initially requested sh35b to fully implement the necessary compliance measures. However, the Government approved a revised figure of 13.967 billion.

“The 35 billion request was more of a projection without a detailed work plan to justify it,” Musasizi explained.

He emphasized that any proposed work plan must have parliamentary approval, and it was necessary to ensure the funds are used effectively.

Support from agri-business initiative

In addition to the Government's allocation, UCDA has secured support from the Agri-Business Initiative Development (aBi-D), which opened a sh16b funding window at the start of the 2024/2025 financial year.

These funds, made available to the private sector, will be used to establish an EUDR co-ordination unit managed by Café Africa.

This unit will oversee various activities funded by aBi-D, including awareness campaigns, sensitization by Royal Media, and the registration of 900,000 coffee farming households.

The minister said UCDA will take the lead in supervising these activities to ensure that they align with Uganda’s overall coffee sector strategy and meet EUDR standards.

Ensuring traceability in the sector

Musasizi also emphasized the importance of establishing traceability systems within Uganda’s coffee sector.

He said this will ensure that Ugandan coffee can be certified as deforestation-free, which is a key requirement of the EUDR.

He reassured members of the committee that the government had now provided the necessary funds and that there would be no further delays in meeting the EU's compliance deadline.

“The funds will be released in full on Thursday, and there is no reason to worry about the deadline. We are confident that this 13.967 billion will be sufficient to meet the objectives set out under the EUDR,” he stated.

MPs response

Several Members of Parliament expressed concerns and offered recommendations during the session.

Robert Migadde Ndugwa (Buvuma Islands County, NRM) emphasized the critical nature of Uganda’s coffee exports, describing the commodity as the country’s "black gold." He urged the Government to prioritise compliance with the EUDR, noting that Uganda risks facing dire consequences if it fails to act swiftly.

“Coffee is our lifeline, and we know the risks we face if we do not act urgently. We cannot afford to plan for extensions or delays at this point. The time for action is now,” Migadde said.

Hope Grania Nakazibwe, the deputy chairperson of the agriculture committee, reiterated the need for urgency, while Ephraim Biraaro Ganshanga (Buhweju West County, NRM) suggested exploring alternative markets to reduce Uganda’s reliance on the EU.

Asinansi Nyakato (Hoima City Woman Representative, FDC) raised questions about the clarity of the EUDR requirements, particularly regarding the types of trees that must be preserved or replanted.

She also expressed concerns about the feasibility of training and sensitising Uganda's farmers in time to meet the December 2024 compliance deadline.

“The process is not simple, and we need to negotiate with the EU to allow our farmers more time to comply. Additionally, we must ensure that due diligence is properly carried out, given the challenges we have seen with other agencies like NEMA,” she said.

Other MPs echoed these concerns, with some questioning whether the government would release the remaining funds to fully meet UCDA’s 35 billion budget for EUDR compliance.

Emmanuel Otaala Otiam (West Budama County South, NRM), expressed doubts about the government's ability to meet the December 2024 deadline with the current funding levels.

Negotiating alternative markets

Biraaro further suggested that Uganda should consider negotiating access to other markets outside of the EU to avoid over-reliance on a single market. “Why can’t we explore other markets so that Uganda is not completely dependent on the EU?” he asked.

In response, Musasizi assured the committee that the Government, in collaboration with the trade ministry, is exploring a whole-of-government approach to ensure Uganda’s coffee sector is well-positioned to meet emerging global trade regulations.

He also indicated that the Government would continue to negotiate with the EU to ensure that the regulations do not unfairly disadvantage Ugandan farmers.

Background on EUDR

The EU passed the EUDR on December 5, 2022, to ensure that products entering the EU market do not contribute to deforestation.

The regulation officially came into force on June 29, 2023, with its application set to begin on December 30, 2024. Micro and small enterprises have until June 30, 2025, to comply.

The EUDR covers several commodities linked to deforestation, including palm oil, soy, wood, cocoa, coffee, rubber, and cattle.

These products, along with their derivatives, must be proven to be deforestation-free through traceability and risk assessment mechanisms.

For coffee, the regulation mandates that all imports into the EU must come from land that was not deforested after December 31, 2020. Exporters are required to provide land use maps, proof of compliance with local environmental laws, and a due diligence statement covering the entire supply chain.

Implications for Uganda

With coffee making up a significant portion of Uganda’s exports, particularly to the EU, MPs said compliance with the EUDR is crucial for maintaining market access.

“Failure to meet the EU's stringent requirements could jeopardize Uganda’s position as a major coffee exporter, potentially leading to a significant loss of revenue, Asinansi said.

The release of the sh13.967b on Thursday is expected to kickstart the necessary compliance measures, including the establishment of traceability systems, farmer training, and awareness campaigns.

However, with the December 2024 deadline fast approaching, MPs said it remains to be seen whether Uganda will be able to fully comply with the EUDR in time.