Coffee is a key foreign exchange earner for Uganda

Uganda’s monthly coffee export earnings have broken the US$80m mark, according to Uganda Coffee Development Authority (UCDA) monthly report for March 2022.

Uganda’s coffee exports in March 2022 amounted to 478,023 60-kilo bags worth US$ 80.99 million (Shs285.9bn).

This comprised 360,229 bags of Robusta valued at US $48.94 million and 117,798 bags of Arabica valued at US$ 32.05 million. This was a decrease of 16.40% in quantity but an increase of 51.44% in value compared to the same month last year.

By comparing quantity of coffee exported by type in the same month of last Coffee Year (March 2021), Robusta decreased by 26.96% in quantity but increased by 19.51% in value, while Arabica exports increased by 49.83% and 155.85% in quantity and value respectively.

The report says the decrease in Robusta exports was mainly attributed to lower yields this year that was characterized by drought in some regions. This led to a shorter main harvest season in Central and Eastern regions as well as a short fly crop in Greater Masaka and South-Western regions.

The increase in Arabica coffee exports is due to an on-year cycle characteristic of Arabica coffee production, the report says.

“Shortage of shipping containers in Asia and weather related concerns in Brazil fueled increase in global prices,” the UCDA report, reads in part.

Coffee exports for the 12 months (April 2021-March 2022) amounted to 6,515,642 60-kilo bags worth US$ 790.33 million compared to 5,646,897 60-kilo bags valued at US$ 522.91 million the previous year (April 2020- March 2021).

This represents 15.38% and 51.14% increase in both quantity and value respectively.

Exports by Type and Grade

According to the report, the average export price was US$ 2.82 per kilo, 14 cents higher than US$ 2.68 per kilo realized in February 2022. It was US$ 1.26 higher than in March 2021 (US $ 1.56/kilo). Robusta exports accounted for 75% of total exports, slightly lower than 78% in February 2022. The average Robusta price was US$ 2.26 per kilo, 9 cents higher than the previous month. Washed Robusta fetched the highest price of US$ 3.15 per kilo, a premium of 80 US cents over conventional Screen 18. It was followed by Screen 18 sold at an average price of US$ 2.35 per kilo.

“The share of Sustainable/washed coffee to total Robusta exports was only 1.57%. The proportion of Screen 18 was 21% of total Robusta,” the report says.

Arabica fetched an average price of US$ 4.52 per kilo, 2 cents higher than in February 2022. The highest price was for Sustainable Arabica Fully Washed Sipi Falls sold at US$ 5.42 per kilo, and was followed by Bugisu A+ sold at US$ 5.41 per kilo, a premium of US Cents 36 over conventional Bugisu AA and Wugar which was sold at US$ 5.06 per kilo.

Drugar was sold at 4.23 US$ per kilo, a discount of 83 cents from Bugisu AA. Drugar exports were 37% of total Arabica exports compared to 26% the previous month. The share of sustainable Arabica exports to total Arabica exports was 20%.

Individual Exporter Performance

Ugacof (U) Ltd had the highest market share of 22.74% compared to 20.41% in February 2022. It was followed by Kawacom (U) Ltd 13.39% (6.32%); Ideal Quality Commodities Ltd 9.88% (10.41%) Olam Uganda Limited 8.72% (6.73%); Kyagalanyi Coffee Ltd 8.54% (6.52%) Touton Uganda Limited 7.48% (12.28%); Export Trading Company (U) Ltd 5.71% (2.25%); Louis Dreyfus Company (U) Ltd 4.71% (5.19%); Besmark Coffee Company Limited 3.49% (3.49%); and Kampala Domestic Store Ltd 2.46% (1.39%).

It is important to note that the figures in brackets represent percentage market share held in February 2022.

The top 10 exporters held a market share of 87% higher than 79% the previous month.

“There were changes in positions compared to last month reflecting competition at the exporter level. Out of the 44 exporters that performed, 16 exported Robusta Coffee only while 12 exported Arabica coffee only,” the report says.

Foreign buyers of Uganda Coffee

The top 10 buyers held a market share of 69% of total exports lower than 71% the previous month. Sucafina led with a market share of 14.49% compared to 19.48% in February 2022. It was followed by Olam International 9.44% (8.24%); Touton Geneve 8.19%;(12.13%); Ecom Agro Industrialist 7.76% (5.66%) Altasheel Import & Export Enterprises 7.48% (5.69%); Volcafe 5.32% (4.76%); Louis Dreyfus 4.77%; (5.68%) Cofftea Sudan 4.69%, Aldwami Company 3.51% (3.04%) and DFL For Complete Solution 3.44%.

It is worth noting that the figures in brackets represent percentage performance in the previous month – February 2022. There were changes in relative position of the first ten major buyers reflecting increasing demand for Uganda coffee abroad.

Coffee Exports By Destination

Italy maintained the highest market share of 32.39% compared with 38.02% last month. It was followed by Sudan 24.98% (15.25%), Germany 12.30% (11.96%) Belgium 5.69% (2.65%) and United States of America 4.55% (4.39%).

Important to note is that the figures in brackets represent percentage market share held in February 2022.

Coffee exports to Africa amounted to 143,231 bags, a market share of 30% compared to 94,647 bags (21%) the previous month. African countries included Algeria, Sudan, Morocco, Egypt, South Africa, South Sudan, Somalia and Kenya. Europe remained the main destination for Uganda’s coffees with a 57% imports share lower than 62% in February 2022.

Global Situation

World coffee exports for February 2022 amounted to 11.40 million bags up by 2% from 11.19 million bags in February 2021.

The ICO Composite Indicator price decreased by 7.6% to 194.78 US cents down from 210.89 US cents in February 2022. Certified stocks at the major exchanges of New York and London grew in the month of March 2022. The stocks increased by 13.9% and 5.8% in New York and London respectively. Global coffee production for 2021/222 coffee year is estimated to decrease by 2.1% to 167.2 million bags down from 170.83 million bags in Coffee Year 2020/21. Global consumption is estimated to increase by 3.3% to 170.3 million bags in 2021/22 coffee year compared to 164.9 million bags in 2020/21 coffee year (ICO March 2022 report).

Local Situation

According to the UCDA report, during the month of March 2022, farm gate prices ranged from Sh.2,500-3,200/= per kilo of Kiboko (Robusta dry cherries); Shs. 6,300-6,800/= for FAQ; Sh. 10,000- 11,000/= for Arabica parchment; and Sh.,9,000-10,000/= per kilo for Drugar from Kasese. Robusta Kiboko averaged UGX 2,750/= per kilo; FAQ UGX 6,550/= per kilo, Arabica parchment UGX 10,500/= per kilo and Drugar UGX 9,500/= per kilo.

Outlook for April 2022

UCDA says coffee exports are projected to be 430,000 bags in April 2022. The main harvesting period season in Central and Eastern has come to its tail end.

“Exporters will draw down their stocks to fulfil contractual obligations with buyers abroad. Focus is on the main season in Greater Masaka and South-Western regions which has also been affected by a dry spell,” UCDA says in its March 2022 report.