Coffee farmers have asked that the Government puts in place a national coffee fund through which they can access affordable long-term loans to produce more coffee and grow the subsector.
The head of their Umbrella National Union of Coffee Agribusiness (NUCAFE) Joseph Nkandu, said lack of access to affordable credit has limited entrepreneurship in the coffee value chain as well as limited job creation.
Nkandu was speaking during an event to present his Kenya Entrepreneurship Showcase Impact Award in Kampala recently.
He received the Kenya Entrepreneurship Showcase Impact Award from the Italian Entrepreneurship for Impact Foundation and Tangaza University, Kenya, in recognition of his farmer ownership model innovation.
Using the agribusiness model, NUCAFE seeks to improve farmers’ standard of living by encouraging them to own their coffee along the various stages of the value chain.
Farmers are also trained on how to assume as many roles and responsibilities as possible in the coffee value chain in order to increase their incomes from the value added.
He said limited access to credit and little research have constrained coffee production and productivity, stagnating it at an average 3.3 million bags for the past 20 years, with the highest recorded being 4.2 million of 60kg bags in 1996/1997.
Coffee is now Uganda’s third foreign exchange earner, having been overtaken by tourism and remittances from the diaspora. In 2014, Uganda exported only 3.44 million bags of coffee, fetching the country $409m (about sh1.3 trillion). This was lower than the 3.67 million bags exported in 2013 worth $424 million (about sh1.4 trillion).
“The number of coffee entrepreneurs would have increased, but lack of financing is a major inhibiting factor. It is, therefore, important that a national coffee fund be put in place like it is in countries such as Kenya, Brazil, Colombia and Tanzania, to save farmers from being exploited by commercial banks,” Nkandu said.
“One cannot borrow at high interest rates and expect to remain competitive in the market. We need a coffee fund to enable actors in the coffee subsector access affordable credit to propel production across the value chain. This will enable us to maximally tap into the growing global coffee business.”
Commercial bank interest rates currently average 25%, which is too expensive for farmers and ordinary borrowers. It is estimated that there are about 500,000 smallholder coffee farms in Uganda, each covering less than 2.4 acres of land.
It is also estimated that about 1.7 million households depend on coffee production as their main source of income.
The stagnation in production is also hinged on other challenges, including poor agricultural practices, poor post-harvest handling methods, pests and diseases and counterfeit inputs. Others are nurturing aging coffee trees, poor marketing and low value addition.
The stakeholders in the coffee sub-sector also called for the enactment of a coffee law to guide coffee production and ensure high quality standards in planting, harvesting, drying and processing.
The aBi Trust coffee development officer, Teopista Nakkungu, also reiterated the need for intervention in the coffee sub-sector to enhance quality, access improved seeds and agro-inputs as well as markets.
Earlier, Agriculture minister, Tress Bucyanayandi had revealed the Government plans would set up a Coffee Regulatory Authority to monitor, guide and enforce standards.
He said that this would ensure that farmers adhere to good production practices across the value chain to improve the competitiveness of Uganda’s coffee on the international market.