Lack Of Cheap Capital, Branding Dominate Discussion As Coffee Stakeholders Talk Value Addition

Panelists discussing value addition at Skyz Hotel, Naguru

Key coffee stakeholders this morning converged at Skyz Hotel in Naguru to discuss how to  increase coffee production and value addition in a bid to fetch the local farmer more money.

The discussion was dominated by limited access to funding or cheap capital and the need to brand Ugandan coffee better so as to increase its visibility on the International market.

Kenneth Barigye, the Managing Director at Mountain Harvest, a coffee processing and exporting company based in eastern Uganda, said that the structure of commercial banks in Uganda can’t allow them to support/fund agriculture and value addition. He added that Government credit related facilities channeled through commercial banks don’t work.

“Banks support successful farmers. So, we need support from the beginning. About 80% of Uganda’s coffee is being processed and exported by multinationals who are accessing finance at 4%. If you give me 12% from UDB (Uganda Development Bank), you are setting me up for failure,” Barigye said.

John Nuwagaba, the General Manager at Ankole Coffee, called for the establishment of a farmers’ bank.

“Because these other banks don’t work. Whereas they have the money, they hide it. Or where they have it, they want to lend to big companies…You want to borrow Shs2 billion, but they want somebody borrowing over Shs20 billion. So, you find there is no opportunity for smallholder organizations but if we have a farmers’ bank which can lend at an affordable interest rate, farmers can borrow. We can borrow through a cooperative system,” Nuwagaba said.

According to Annet Nyakaisiki, a coffee barista and founder of Barista House, while the young people are taking up spaces in brewing coffee, the necessary equipment remains very expensive.

“We have come up with training schools and academies to help UCDA in implementing the coffee road map, but we don’t have money to import the equipment,” Nyakaisiki said.

Jackie Arinda, the Chief Executive Officer at Jada Coffee said that it is equally expensive to market coffee products digitally.

“We need to sensitize the public to know that you can take coffee just like tea, but the government must give UCDA money (for marketing). Marketing is not cheap. Influencers are expensive. Brands are expensive. We are no longer analog. Invest in digital platforms. I am not saying you don’t go on radio but if I am on TikTok or YouTube, find me there,” Arinda said, emphasizing the need to grow local coffee consumption and market the country’s unique coffee products.

According to Arinda, the government needs to consider setting up a Supermarket or a coffee plant in one of Uganda’s largest coffee markets and display the various coffee products there.

“Let’s understand the market we are producing for. There is a lot to be done in terms of market research. Secondly, If you have a supermarket in London owned by a Ugandan, it is easier to access it than going to an Italian to give you market access, that means they need funding,” Arinda notes.

Andreas Nicolaides, a Director at Great Lakes Coffee  backed Arinda’s submission.

“Value addition is the brand Uganda first. An exporter will send containers of coffee but it’s not going to be sold as Siipi Coffee on the International Market. It’s all about brand Uganda. The more people who can tweet and market Uganda, the more it will create demand. If you are not able to create demand for people outside to come and invest in Uganda, we are kind of wasting our time. Being in the value addition game is very expensive. Investing in research and development is part of value addition. By the time I pay CES tax, pay flight ticket, pay Amazon to put my product on the shelves, I end up sending out a very expensive product. So, instead of investing in soluble plants here, why not go and compete in that market. Maybe build a roasting plant in Germany, brand Uganda, give every opportunity to Ugandan products, roast it there and add value in their country,” Nicolaides noted.

Gerald Katabazi, the brain behind Volcano Coffee, says Government can partner with private sector players in installing packaging lines for young people aimed at reducing branding costs.

According to Katabazi, young people are involved in value addition but lack money to brand their products.

“The young people who I actually support have a challenge with packaging. Let’s have a packaging line so that these young people who are involved in coffee can have affordable packaging materials for their products,” Katabazi says.

According to Uganda Coffee Development Authority (UCDA) Managing Director, Dr. Emmanuel Iyamulemye, “all together, we have to add value to our coffee.”

“Our coffee value addition is inched in the coffee roadmap. We have been interrogating which aspects along the value chain have not been implemented by the government and private sector and these are the gaps which we have picked out and will be presented to the President,” Dr. Iyamulemye said.

He revealed that coffee production has increased by 86% from 4.5m  bags in FY2015/16 to 8.4m bags in FY 2021/22.

“UCDA’s focus is to increase production to 20m bags by 2030 as per the Coffee Roadmap launched by President Yoweri Museveni.This will put more money in pockets of farmers,” he said.

Information captured from today’s meeting is expected to be presented before President Yoweri Museveni at the State House, Entebbe on Friday by a team led by Robert Kabushenga.