The Government of Uganda recently merged the Uganda Coffee Development Authority (UCDA) into the Ministry of Agriculture, Animal Industry and Fisheries (MAAIF). The aim was to relieve the government of the financial drain on its resources and the burden of wasteful administration and expenditure on the Authority.
European Union Deforestation Regulation (EUDR) update
The rationalisation came at time the country was in the middle of the processes to meet European Union Deforestation Regulation (EUDR) for the coffee subsector. The new regulations sets strict guidelines on traceability and due diligence to ensure that coffee produced after 30 December 2020 is not from deforested land.[1] The EU passed the regulation in December 2022 and take effect on January 1, 2026 after a one year extension to give developing time to comply with the due diligence obligations.
Securing the EU market is critical for Uganda. It accounts for the lion’s share of Uganda’s coffee export market. The figure below shows that for close to two decades, the EU has been the destination for over 60 percent of Uganda’s coffee. Given the magnitude of the market, losing it will not only result in a significant loss of about USD 1.14 billion (UGX 4.2 trillion) in foreign exchange revenue per annum but also affect about 1.8 million coffee farmers in the country.
UCDA fate and EUDR compliance!
UCDA has been at the forefront of EUDR compliance activities through co-chairing the National EUDR Task Force, which was formed to comply with the regulation obligations. The dissolution of the agency disrupts the leadership of the task force, hence derailing some activities. Therefore, MAAIF must act fast to minimise the effect of these disruptions.
First, the ministry should ensure that the taskforce is fully operational by filling the chairing seat previously held by UCDA staff. The person will likely come from the Department of Coffee Development, which the ministry has yet to form, to take on the roles of UCDA. The person should have the power to make quick decisions regarding the taskforce activities to avoid the bureaucracy typical in government ministries.
Secondly, MAAIF and the other stakeholders need to sort out the issue of administrative costs of compliance. The government and donor organisations are footing the bill for farmer registration. It is not clear as to who will bear the costs of certification and the traceability system. According to the Uganda Coffee Alliance, these costs are already a concern of most smallholder farmers. If the price of implementation is to be borne by farmers, they are unlikely to comply as this affects their profit margin. Moreover, there is no hope that farmers will receive price premiums for complying, hence no incentive.
Another issue that MAAIF should be ready to address is possible rationalisation backlash in case farmers retaliate and refuse to register. For instance, farmers in the Mityana district area have already expressed concern that the regulation could be a government ploy to control the pricing and marketing of coffee. This fear adds on to the existing one concerning the potential monopoly likely to arise from a single firm, Uganda Vinci Coffee Company Limited, controlling the entire coffee value addition chain. [1].
Lastly, the fact that about 80 percent of the country’s coffee is produced by smallholder farmers [2] who are fragmented, makes registration and compliance with other requirements burdensome and costly. Cooperatives and producer organisations would be fundamental in implementing and sustaining the compliance standards. Kenya has successfully used the cooperative approach to comply with the EUDR. The country has 800,000 smallholder farmers, all members in 637 cooperatives [3] across the country, these market over 80 percent of Kenya’s coffee. Kenya’s approach to the EUDR was through mechanisms that support cooperatives whose focus is on quality and promoting traceability by maintaining detailed records of each farmer’s production [4].
Similarly, Uganda needs to leverage on the producer organisations/cooperatives approach to ensure compliance. According to the International Labour Organisation (ILO) report (2024) on mapping coffee value chain in Uganda, there are about 1,600 producer groups of coffee farmers in the country. These could be an entry point to expedite the compliance process, starting with farmer registration. However, these groups are few. The ILO report shows that the existing cooperatives/producer groups constitute only 23 percent of the coffee farmers. Therefore, MAAIF needs to make use of its extensive structure of extension workers in sub counties to mobilize farmers into producer groups to facilitate quick compliance. The cooperative approach is also cheaper than the National EUDR taskforce, which has to register farmers, visit their plots, and certify their produce.
Another advantage of using cooperatives/producer organisations to comply is that they can use the large size of their clientele to negotiate for premium prices, which can be used to cover certification and traceability costs.
Future actions
In conclusion, securing the EU market requires MAAIF to act:
- First, by forming the Department of Coffee Development and ensuring that the National EUDR taskforce is fully functional by filling the leadership vacuum created by the rationalisation.
- Second, there is a need for continued sensitisation of farmers on the benefits of complying with the regulation.
- Third, MAAIF and the National EUDR should adopt the cooperative/producer groups approach to expedite compliance.
- Lastly, MAAIF and other stakeholders should secure funding for the administrative costs (certification and traceability system) not to burden and discourage farmers.
[1] https://www.ntv.co.ug/ug/news/national/uganda-s-coffee-industry-faces-uncertainty-after-ucda-dissolution-4819080
[2] https://www.monitor.co.ug/uganda/business/prosper/how-eu-rule-will-change-coffee-sector-4773404
[3] https://www.avsi.org/en/news-and-press/news/kenya-coffee
[4] https://fairfresh.net/the-vital-role-of-cooperatives-in-kenyas-coffee-industry/
[1] https://www.parliament.go.ug/news/3362/uganda-beat-december-deadline-coffee-exports-eu