The controversial coffee agreement that the government of Uganda struck with the Italian investor Enrica Pinetti in February of this year has generated a lot of tension and debate.
Many people have criticized the way the government signed away the rights of close to two million Ugandan coffee farmers by subjecting them to the monopoly power of one foreign investor.
While a lot of the criticism has merits, we have to also question the arguments and intentions of the local coffee dealers.
For many years, many Ugandan companies have been selling green beans to European and American companies and pocketed the largest chunk of the proceeds.
It is safe to say that coffee processors have been the biggest beneficiaries of this arrangement where they have exploited smallholder farmers by giving them low prices and shared the biggest chunk of the profits.
The government’s decision to award Uganda Vinci, the rights to control the industry may be a step too far. However, one cannot say that Ugandan coffee producers had a better plan than what Vinci is offering.
Apart from Andrew Rugasira’s Good African Coffee, we have not heard of concrete plans by the likes of UGACOF and others to process our coffee into a good product targeting consumers in new markets such as China and the Middle East.
Instead of our exporters complaining, they should come out and disclose their plans before attacking the investor.
The agreement, unpleasant as it may, should serve as a starting point for discussion and possible empowerment of the native coffee industry.
Our view is that the government should only abandon price controls as these already violate its own economic liberalization tendencies. The government needs to offer similar tax, access to land and electricity incentives to local players and give them performance targets on industrialization to match other countries like Vietnam, Rwanda and Ethiopia.
In summery, the agreement should therefore act as a wake up call for action from all players in the industry to engage, and offer better plans and solutions for Uganda to claim its rightful place as Africa’s biggest Coffee Exporter.
