Uganda’s coffee sector is shrouded in uncertainty and mistrust a month after the government withdrew from the International Coffee Organisation (ICO).
The matter has been confounded by the entry of a new processing firm, which the government has given a number of subsidies, including priority access to the country’s top quality coffee beans.
However, the Uganda Coffee Development Authority (UCDA) insists the withdrawal from ICO is good for farmers and exporters, and that the country is willing to rejoin organisation if its grievances are addressed.
Uganda said it withdrew because of unreasonable articles in a new two-year draft agreement. The country says that it needs unconditional market access that allows for export of value added coffee, which carries a premium price, instead of beans as currently provided for by the agreement.
Uganda also wants ICO to brand its coffee as Ugandan on the international market, especially robusta, so that it can attract premium prices and increase quotas exported to different markets.
No impact on exports
UCDA managing director Emmanuel Iyamulemye told The EastAfrican that the withdrawal has no impact on exports or production.
“Some countries have withdrawn because of similar reasons. As Uganda, our interests had not been included in the draft agreement for the next two years and we put it to ICO,” he said.
Vietnam, the world’s second biggest coffee producer and the US, one of top consumers of the beverage globally, have both withdrawn from the ICO.
However, Uganda’s case has been thrown into the limelight with complaints that the government could have surrendered most of its coffee business to an Italian investor. A leaked document signed by Uganda’s Minister for Finance Matia Kasaija and Enrica Pinetti the owner of Uganda Vinci Coffee Company Ltd allows the firm to put up a processing factory in the Namanve industrial park, 10 kilometres east of Kampala.
The company has been given land to produce roasted beans, capsules and instant coffee for export and domestic consumption.
According to the document, the government agreed that it “will take all reasonable measures to give priority of supply of coffee to the company before registering any contract or acknowledging any arrangement for the export of coffee beans so that the company will have ample supply of coffee to sustain its operations”.
UVCC whose concession expires in 2032 but is subject to renewal, shall also be entitled to tax exemptions including import duties, value added tax, excise duty, stamp duty, corporate income tax and employment-related taxes.
Ms Pinetti has already been accused of failing to deliver on an earlier Lubowa International Specialised Hospital project, even after the government advanced $397 million in funding.
Government officials say there is no link between the withdrawal from ICO and the signing of the contract with the company.