Uganda low cocoa production can't attract big investors from the EU, US

Jan 28, 2016

Uganda has long enjoyed a well-earned reputation for co-operatives banking and commercialisation of Agricultural Commodities and in recent years it has become a leading hub for commodities trade such as grains, cotton, coffee, cocoa and other soft commodities

 

By Bosco Ochira Lawino

Following remarks by President Museveni about the added values on Cocoa product during his campaign in Bundibugyo, he was very optimistic about the development of Cocoa value chain as usual leaving out the challenge that Uganda cocoa low production cannot attract big investors from major importers.

The total land area suitable for cocoa growing in Uganda is estimated to be 92,000 ha. However, according to the UBOS statistical abstract of 2011, the land area planted with cocoa is 21,198 ha of which 6,054 have mature productive cocoa plantation and 11,790 ha are covered by young cocoa planted under the strategic export innovations with estimated total country production of 28-30 thousand metric tonnes per year. Cocoa is grown in the sub- Saharan countries of west and eastern Africa that include DR Congo, Nigeria, Ghana, Ivory Coast, Tanzania and Uganda.

Uganda has long enjoyed a well-earned reputation for co-operatives banking and commercialisation of Agricultural Commodities and in recent years it has become a leading hub for commodities trade such as grains, cotton, coffee, cocoa  and other soft commodities in East Africa with over four hundred registered companies involved in this Agricultural global market. It has involved into being one of the world's leading Agricultural crop producing places in East Africa, for other additional trading commodities, such as metals, soft agricultural products, fertilizers, grain and oilseeds.

Besides having attractive structures and competent experienced professionals, it offers a broad range of banks, financial institutions, shipbrokers, major insurance and surveyor companies facilitating the development of this trading activities.

This prompted the Uganda government to diversify its focus into this global commodities market as companies and licensed exporters of coffee and other soft commodities suppliers gained value in the European markets over the past years with a solid experience and knowledge geared towards the supply value chain business, especially in coffee trading.

The Uganda Government focus has left out the global Cocoa marketing procedures, the international cocoa control bodies such as the International Cocoa Organisation (ICCO) amongst others commodities certification authorities, does not recognise Uganda on the chart of  world cocoa trading terminal in  the EU and USA countries, because Uganda as a country of cocoa origin has never border to become a member of the ICCO by registration, increase of Cocoa production, control of price and qualities, like it has registered with  the ICO it is also well positioned that Uganda cocoa origin production cannot even certify the volumes supply  requirements for  only one buyer in Europe for a specific trading transactions with obligations to countertrade system.  There are many exporting key players at the farm gates that have failed to work together to control farm gate price because of computation they end up buying high moisture contain cocoa beans at more than the world market terminal price.

I assume the President might not be aware of this internal weakness affecting the Cocoa value chain.

The Uganda government needs to backup competent team together with the exporting companies  to develop  commercial activities in promoting the Cocoa production and  the government must himself be involved in the ICCO membership, in order to able to offer consulting services in soft commodities trading, sourcing, commercialisation of warehouse managing to exporters on contract terms.

 As a young global growing country, its strategies need to aims towards risk mitigation through government in-depth analysis. This is achieved by the systematic use of financial instruments to protect physical positions together with an ongoing review of geopolitical economics situations in Uganda, develop strong insights relationship with our local farm gates suppliers and the exporting companies operating in producing farm gates and the international buying countries worldwide, to established a solid commodities enterprise in Uganda, with 90% actively in cocoa, coffee and other oil seeds trading equally.

This network is becoming increasingly in inter-related commodities trading countries especially in soft commodities such as grains, cocoa, coffee, oil seeds from south and western Africa and other companies from the European market.

The writer is a Cocoa beans exporter and managing director Tropical Trade Tnternational Co. Ltd

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