Essay on Development Policy. Domestic Market Development: How could a Ugandan Coffee School contribute to domestic coffee market development?

Transcription

1 Essay on Development Policy Domestic Market Development: How could a Ugandan Coffee School contribute to domestic coffee market development? Nicole Locher NADEL MAS-Cycle March 2010

2 Entwicklungspolitischer Essay Index Domestic Market Development: How could a Ugandan Coffee School contribute to domestic coffee market development?...i Index...II 1 Introduction Ugandan Coffee Market Coffee Production Value Added in Uganda Coffee Export Domestic Coffee Consumption as Market Potential ICO Recommendations Actual Situation of the Domestic Coffee Consumption in Uganda Causes for Low Domestic Consumption Approaches to Promote Coffee Consumption in Uganda Institutions and Policies in Favour of Coffee Market Development Coffee Policy Uganda Coffee Roaster Association Uganda Coffee Development Authority The Concept of a Ugandan Coffee School Overall Goal of the Ugandan Coffee School Course Offer and other School Activities Target Groups Conclusion...16 Literature...17 II

3 Introduction 1 Introduction Coffee has been the largest single foreign exchange earner for Uganda since the 1970s, and is based entirely on small scale production 1. Uganda produces two types of coffee: 80% Robusta which grows at altitudes ranging from 900-1,500 meters above sea level in areas around Lake Victoria basin, and 20% Arabica produced at higher altitudes between 1,300-2,300 meters above sea level. In Uganda, 80% of the working population is employed in the agricultural sector. There is a long tradition of growing coffee, and in most regions there are coffee trees in every smallholder farmer s garden. Nevertheless, Uganda is traditionally a tea-consuming country, with coffee normally grown as a commercial crop for export. Domestic coffee consumption is very low. In 1991, the Ugandan government appointed the Ugandan Coffee Development Authority (UCDA) with a mandate to improve coffee marketing, to ensure the quality of exported coffee and to increase domestic consumption. Many strategies and ideas have been developed so far, but few results can be seen. This essay discusses the current situation regarding domestic coffee consumption in Uganda, what approaches the government chose to increase domestic coffee consumption and how a Ugandan Coffee School could contribute positively to the development of the Ugandan coffee market. Chapter 1 gives a short overview about facts and figures of the Uganda coffee production, industry and trade. Chapter 2 compares the domestic coffee consumption with the export volume and discusses reasons for low domestic coffee consumption and approaches to develop the local market. Chapter 3 presents the political environment that should favour a positive development of the domestic coffee market. Chapter 4 discusses how a Ugandan coffee school could support and complement the political efforts of promoting domestic coffee consumption, by gathering information, educating local staff and promoting domestic consumption of the number one agricultural product of Uganda. 1 EAFCA: Uganda The Origins of Robusta Coffee. 1

4 Ugandan Coffee Market 2 Ugandan Coffee Market 2.1 Coffee Production Africa s share in world coffee production for crop year 2009 was 12.3%. Figure 1 shows that in the production year 2009, Ethiopia produced most coffee of all African countries with 4.9 million bags 2 followed by Uganda with 3.4 million bags 3. Uganda is ranked as the 7 th biggest coffee producer in the world 4, the third biggest Robusta producer in the world 5, and leading exporter of organic coffee in Africa. Ugandan coffee is produced by approximately 500,000 smallholder farmers; about 25% of the counrty s population is dependent on coffee for their livelihood 6. One of the biggest challenges in the Ugandan coffee production is the very low productivity. While the leading coffee producer, Brazil, reaches Robusta yields of 6-7 tons per hectare, farmers in Uganda have not been able to exceed average Robusta yields of kg/ha. Since Uganda is one of the birthplaces of Robusta coffee, the climate and soils would definitely allow an increase in productivity to approximately 2 tons/ha 7. Figure 1: Total coffee production 2009 in million bags of 5 most important African coffee producers 8, 9 Since 1993, Ugandan coffee has been epidemically infected by the coffee wilt disease 10. It is estimated that 50% (ca. 150 million trees) of the overall Robusta coffee tree population has died. Late reaction and 2 1 bag = 60 kg 3 ICO: Statistics. 4 EAFCA: Uganda The Origins of Robusta Coffee. 5 You, L. and Bolwig, S. (2003) IFPRI: Alternative Growth Scenarios for Ugandan Coffee to EAFCA: Uganda The Origins of Robusta Coffee. 7 National Coffee Stakeholders Meeting Uganda 8 r = Robusta only; r/a = Robusta and Arabica, a = Arabica only 9 ICO: Statistics. 10 Coffee wilt disease (CWD), attributed to the fungus Fusarium xylarioides, has caused losses to coffee production in Africa since 1927 but has been largely contained through the use of host resistance and in some instances wide-scale sanitation practices. A re-emergence of CWD on Coffea canephora (Robusta coffee) in 2

5 Ugandan Coffee Market lack of investment in research are the primary reasons why only few resistant varieties are available and planting material is still scarce. The volatile coffee prices on the world market have also discouraged farmers from re-planting coffee trees. However, coffee production in Uganda remains competitive because of low marginal costs of production, compared to other countries Value Added in Uganda Ugandan Robusta is demanded by roasters around the world because of its intrinsic taste qualities which are necessary for certain blends, especially espressos and instant coffee. Roasters are generally becoming more flexible in their choice of coffee types; the substitution of Ugandan Robusta is possible. However, roasters are willing to pay a surplus for Ugandan Robusta if a continuous supply of good quality beans is guaranteed. Quality management is one of the big challenges that the Ugandan coffee industry faces. For this reason most coffee is exported as green coffee and value is added in the consumer countries. Uganda has the potential to add value to its main export product. The several processing steps from the primary coffee bean to the exportable green coffee are usually done close to the production area. In the coffee year 2007/08, 3.2 million bags were exported after being processed by 272 primary factories, the majority of which are located in the Central and Eastern regions of Uganda. Most of these facilities are for primary processes like hulling and grading only, but Uganda has also various operating roasting plants which could add more value to the final export product. It would even be possible to manufacture consumable coffee products (e.g. instant coffee). Ugandan Roasters united in 2002 as Uganda Coffee Roasters Association (UCRA) (Chapter 4.2). Together they try to add value, for example through coffee roasting and manufacturing of soluble and ready to drink coffee, within the country borders. 2.3 Coffee Export In 2009, Uganda exported 0.7 million bags Arabica and 2.3 million bags Robusta which is over 90% of all coffee produced. Coffee contributes substantially to Uganda s GDP (15% of GDP in 2006/07) 12. Among all Ugandan export goods, coffee is registered with the highest value of export earnings (USD 173 million in 2005) 13. The coffee price crisis ( ) was caused by total world coffee production exceeding the total demand. As a consequence of the oversupply on the world market, coffee prices Uganda, DRC, and Tanzania has already led to heavy losses and threatens future production in these countries. External symptoms are: chlorosis, wilting and drying of leaves progressing to a gradual and often unilateral dieback and defoliation that ultimately extends to the entire tree and results in death. [Rutherford, M. A (2006)] 11 UCDA: Major Challenges to the Coffee Industry. 12 UCDA: Domestic Coffee Consumption Strategy for Uganda. 13 Uganda Export Promotion Board: Export Performance Analysis 3

6 Ugandan Coffee Market declined 14. Global Robusta prices dropped from 0.83USD/lb in 1998 to the lowest annual average of 0.28USD/lb in In Uganda, over 500,000 coffee producing families were affected by the coffee crisis which entailed losses of grower s incomes and weakened the Ugandan coffee industry 16. The combination of low yields caused by the coffee wilt disease (Chapter 2.1) and the low coffee prices due to the crisis reduced the farm income drastically. This loss of income has had a significant impact on the economic (export earnings, abandonment of farms, loss of jobs, etc) and social life (migration, increase in households living under the poverty line, less money for health care, increased malnutrition, etc.) of Uganda 17. In the last five years, prices recovered slowly and reached a high average level of 1.05USD/lb in This trend encourages the Ugandan coffee industry to invest again in new production sites, equipment and technologies. This Chapter showed how important the coffee industry is for the wellbeing of the Ugandan economy. Being the third biggest Robusta producer in the world, Uganda could have remarkable negotiation power within the world market. However, Uganda will stay a weak market player as long as problems like fluctuating quality and volume due to disease and inadequate post harvest handling are not addressed. According to the International Coffee Organization, coffee-producing countries should focus on value added, quality improvement and technical advances to strengthen their coffee markets. A possible strategy to sensitize Ugandans about the quality of their own coffee is to promote domestic consumption. It is assumed that if producing countries would drink more of their own coffee, quality control, value added and specialty coffee preparation would become more interesting within the country. Chapter 3 will therefore look at reasons why domestic coffee consumption in Uganda is low and what could be done to increase domestic coffee consumption as part of domestic market development. 14 ICO: Lessons from the World Coffee Crisis: A Serious Problem for Sustainable Development. 15 ICO: Statistics. 16 UCDA: Uganda Coffee Roasters Association moves forward. 17 ICO: Lessons from the World Coffee Crisis: A Serious Problem for Sustainable Development. 18 ICO: Statistics. 4

7 Domestic Coffee Consumption as Market Potential 3 Domestic Coffee Consumption as Market Potential 3.1 ICO Recommendations To recover from the international coffee crisis, the International Coffee Organisation (ICO) recommended interventions in the areas of value added, quality improvement, technical advances and worldwide coffee consumption. The efforts to promote consumption have a key role to play in achieving a balanced and more sustainable world coffee economy. [ ] Four key areas have been identified for the increase in consumption of coffee: Promotion of consumption in producing countries; Dissemination of positive health-related information on coffee; Promotion of consumption in new and emerging markets and Improvement of quality. 19 The ICO elaborated a guidebook 20 for coffee producing countries which contains strategies and best practices that lead to increased domestic coffee consumption. First results from this promotion strategy can be seen; Brazil became the leading per capita coffee consumer worldwide followed by Colombia. The best African example is Ethiopia, where the country consumes close to 50% of its own production. The Ugandan government also aims to follow the ICO guide, but practical implementation of the recommendations takes time and effort from various institutions. 3.2 Actual Situation of the Domestic Coffee Consumption in Uganda In Uganda, as in many other coffee producing countries, domestic consumption is negligible. The Uganda Coffee Development Authority (UCDA) (Chapter 4.3) estimates that domestic consumption is only about the equivalent of 6.5% of total exports and 5.7% of total production. In 2009, 3.4 million bags of 60kg coffee were exported, therefore around bags were consumed within the country. Calculated with the current population of 32.4 million 21 people; the per capita consumption is 360 grams, which is relatively low compared to the per capita consumption of Brazil of 5.14kg and Ethiopia 1.7kg (2006). The following scenario estimates to what extent Ugandan coffee consumption could be increased: If every Ugandan above the age of 14 years (50% of the population) would drink one cup of coffee per day (7g coffee), Ugandans would consume more than 20% 22 of the countries coffee production, which is more than three times of today s amount. 19 ICO: Promoting Coffee Consumption. 20 ICO: A Step-by-Step guide to promote coffee consumption in producing countries. 21 CIA Factbook: Uganda million people /2 x 365 days x 0.007kg coffee / 60kg coffee per bag = 0.69 million bags; 0.69 million bags/3.4 million bags = 20% 5

8 Domestic Coffee Consumption as Market Potential With the above scenario, Ugandan per capita coffee consumption would still be lower (1.2kg) than in Ethiopia. The scenario looks promising, but to develop a strategy on how to increase domestic coffee consumption to such an extent, the following questions need to be answered. Firstly, what are the causes of low domestic coffee consumption in Uganda? Secondly, how is it possible to overcome these market constraints? 3.3 Causes for Low Domestic Consumption There are several causes for low coffee consumption in Uganda. Under the British protectorate, coffee was mainly exported to Europe. The British tried to keep local consumption low by spreading rumours about coffee being very unhealthy 23. Even today, most Ugandans are convinced that drinking coffee will give them high blood pressure and that they will die earlier, if they consume coffee regularly. Since the tradition of drinking coffee has been abandoned, traditional knowledge about coffee brewing has been forgotten, and knowledge about specialty coffee preparation has never developed 24. Before the Ugandan coffee market was liberalized 25, coffee was sold through a state-controlled monopoly, including a marketing board 26. Although coffee was mainly an export product, promotion within the country was taken seriously, and enormous efforts were put into increasing the domestic coffee consumption. As a result, supermarkets were selling Ugandan coffee brands, and coffee shops in Kampala and in major towns like Jinja, Mbale, Masaka, Soroti, Gulu, Lira, and Arua were operating successfully. Locals remember meeting friends in these government-owned shops over a delicious, affordable cup of coffee. During the coffee market liberalization, the coffee shops were sold to private investors. Unfortunately the new owners did not have enough knowledge about coffee, and had no expertise in quality coffee preparation. The interest in investing in the maintenance of equipment was low and customer numbers dropped rapidly. Therefore, most coffee shops closed after a short time. Today there are only five coffee shops in Kampala with the equipment and skills to brew specialty coffees. In Ugandan homes, the little coffee that is consumed is always instant coffee; only few hotels serve brewed coffee. A typical Ugandan coffee consumer does not ask for a particular specialty coffee, 23 No literature has been found about this behaviour of the British, but members of the Ugandan Coffee Industry mention it frequently. 24 UCDA: Domestic Coffee Consumption Strategy for Uganda. 25 Because of financial problems (decline in coffee prices, collapse of the ICO quota system in 1998) and recommendations of international financial institutions, coffee-producing countries began reforming their coffee subsectors in the early 1990s as part of broader macroeconomic reforms. In Uganda, the liberalization of the coffee market succeeded in introducing private sector dynamics into the state marketing system. [Akiyama, T. et al.] 26 AKIYAMA, T. et al. (2001): Commodity Market Reforms; Lessons of Two Decades. 6

9 Domestic Coffee Consumption as Market Potential because he does not have the knowledge about the broad variety of coffee that can be prepared. Restaurants, coffee shops and hotels do not invest in equipment that would allow them to offer specialty coffee, because customers do not ask for it. Hence, both consumer and preparation localities need to acquire skills on specialty coffee preparation and tasting. The preference of tea is hard to overcome because of a high coffee retail price. However, the coffee consumption study of UCDA established that relatively expensive Nescafe, which is imported instant coffee, was highly consumed compared to cheaper brands like Elgon Pride, Star Coffee, Africafe, Nguvu Approaches to Promote Coffee Consumption in Uganda Coffee consumption is anchored in the traditions of several Ugandan tribes. In the Baganda culture, drinking coffee is used as a symbol of brotherhood; other tribes like Banyoro, Batooro and Bagisu welcome their guests by offering coffee 28. Hence, a simple approach for promoting coffee consumption is to call upon traditions and to reintroduce traditional habits of brewing coffee for guests and friends. In 2007, ICO members endorsed a proposal to develop an ICO coffee promotion network. This network should provide information about experiences from pilot projects in India, Indonesia and Mexico with the aim to create a reliable additional market for growers and preparing the local industry to export valueadded products. The network should also improve the accessibility to scientific information about the positive health aspects of drinking coffee and best practices to increase domestic coffee consumption (Step-by-step Guide) 29. UCDA writes in the Domestic Coffee Consumption Strategy: it can be argued that the ICO s current initiatives mentioned above [Chapter 3.1], if properly implemented by policy makers, will result in an increase in coffee consumption, stabilize global prices and can transform the lives of coffee producers through increased incomes as well as consumers who would be assured of tasting a good cup of coffee. This statement has to be analysed critically. It is possible that an increase in [domestic] coffee consumption will have positive effects on coffee quality ( a good cup of coffee ) within coffee producing countries, because producers and consumers interact directly and domestic value-added becomes more viable. Nevertheless, it is exaggerated to say that an increase of coffee consumption in coffee producing countries could stabilize global prices and increase producers incomes. If all coffee producing countries would start to consume more coffee, it is possible that the demand for coffee on the world market would rise a little bit (Figure 2: D moves to D1, p w rises to p 1 ). 27 UCDA: Domestic Coffee Consumption Strategy for Uganda. 28 Ibidem. 29 Ibidem. 7

10 Domestic Coffee Consumption as Market Potential But the volatility of world market prices is mainly caused by changing coffee yields due to favourable / unfavourable climate, disease, new varieties etc. The world coffee production (x w ) will therefore be high in years with good yields and lower in other years (x 2 ). This change in coffee quantity on the world market causes price volatility (p 2 ). It is therefore wrong to say that an increased domestic coffee consumption could stabilize global prices. Figure 2: Effects on the coffee world market price with changing demand / supply. p S p 2 p 1 p w p 2 D1 D x 2 x w x 1 x 2 Although the above statement was refuted, UCDA is still convinced that the Ugandan coffee industry will profit from an increased domestic coffee consumption. After analyzing experiences from other countries (India, China and Brazil) and recommendations from Ugandan coffee vendors, UCDA plans activities in the following areas: 1. Promoting coffee preparation and drinking in homes, institutions, hotels and coffee shops with special designed activities (ex. holding a National Coffee Day, organizing barista 30 competitions), advertisements and media. 2. Divulging knowledge about import duty on foreign brands, availability of roasting and brewing equipment. 3. Propagating positive health aspects of drinking 31 coffee and clarify wrong information about the danger of drinking coffee among medical professionals and in public. 30 A barista is a person, usually a coffee-house employee, who prepares and serves espresso-based coffee drinks. International coffee/barista schools certify their graduates according to the acquired level of expertise or particular skill in the preparation of specialty coffee. 8

11 Domestic Coffee Consumption as Market Potential 4. Elaborating and strengthening coffee related policies and associations as well as establishing linkages between public and private stakeholders. 5. Instituting quality labels and quality contests, and supporting the sales of high quality coffee at affordable prices within Uganda. 6. Improving coffee packaging and redesigning cafés and restaurants to attract more customers 32. To overcome the main market constraints UCDA decided to work directly with coffee stakeholders like roasters, hoteliers, supermarkets and coffee consumers. For example UCDA and EAFCA (East African Fine Coffees Association) supported by experts from the Coffee Quality Institute (USA) organized two national barista championships. In addition, UCDA together with the UCRA train coffee stakeholders in coffee roasting and brewing practices. There is a high demand for more training, but the capacity of UCDA is not sufficient to advertise, organize and conduct more trainings. Hence, a new institution like a Coffee School could possibly help to offer trainings. In addition to the above activities, UCDA is approaching an increased domestic coffee consumption by identifying and supporting special groups of people with the most promising coffee consumption potential. University members (teaching staff, students and graduates), who represent less than 1% of the total population, were recognized as important target groups. UCDA arguments that academic life asks for high intellectual performance and coffee consumption supports active learning and concentration. Once graduates are absorbed by the industry as middle income earners, they can certainly afford regular coffee drinking and they will work in a favourable climate for coffee consumption. For these reasons UCDA propagates coffee drinking among University members by subsidizing coffee shops near the campus and providing free barista courses to a small number of students. It is questionable whether governmental interventions, funded with public money, should be in favour of such a small target group. UCDA should preferably spend their coffee promotion budget on public accessible interventions for example targeting urban youth (34% of the total urban population 33 ). The approach to offer investment assistance to coffee shops is a possible strategy but should rather be financed through private investors, than through public money. UCDA could try to partner an international franchise (ex. Starbucks). 31 As explained in Chapter 3.3 many Ugandans still believe that drinking coffee is very unhealthy and therefore keep their coffee consumption as low as possible. Education is necessary to overcome superstitions about coffee causing serious health damages. 32 UCDA: Domestic Coffee Consumption Strategy for Uganda. 33 Ibidem. 9

12 Domestic Coffee Consumption as Market Potential After looking at different approaches to increase domestic coffee consumption in this chapter, the next Chapter will focus on supporting policies and institutions. 10

13 Institutions and Policies in Favour of Domestic Coffee Market Development 4 Institutions and Policies in Favour of Coffee Market Development 4.1 Coffee Policy In 2001, the Ugandan government identified coffee as one of the five export commodities under the Strategic Intervention Program (SIP) in line with the Poverty Eradication Action Plan (PEAP). Although, the government recognized the importance of coffee for the Ugandan economy, there is no written coffee policy yet. The government of Uganda directed the Ministries of Agriculture, Trade and Industry to draft a coffee policy. Coffee stakeholders were invited to participate in elaborating the first draft. With financial support of various development cooperation agencies, a consultant was employed to conduct a field study. The study will bear information from the grass root up to the export level including needs of coffee roasters 34. There are several governmental programs that support the coffee sector indirectly. For example the National Agricultural Advisory Service (NAADS) Program, which has a mandate to develop a demanddriven, farmer-led agricultural service delivery system, targeting poor subsistence farmers. Its development goal is to increase rural livelihoods by increasing agricultural productivity and profitability in a sustainable manner. Within this program, coffee farmers can benefit from free extension services, seedlings and farm inputs. 4.2 Uganda Coffee Roaster Association UCRA encourages and supports the involvement of Ugandan coffee stakeholders, in the attainment of sound and favourable policies. The association registers trademarks and promotes labels for the international market. UCRA cooperates with foreign and domestic trade groups and governmental agencies in the definition and enforcement of rules, laws and projects for improving the conditions under which the Ugandan coffee industry operates Uganda Coffee Development Authority UCDA was established in 1991 by an Act of Parliament to oversee the development of newly liberalized Ugandan coffee market (Chapter 3.3). The vision of UCDA is Making Uganda a distinguished producer of high value coffee. The mission is to develop and promote the coffee industry through research, provision of clean planting materials, quality assurance and dissemination of timely market information to stakeholders and any other matters therein. UCDA crafted a three-year Corporate Plan 2007/08-34 UCTF: Time for the Coffee Policy. 35 UCDA: Uganda Coffee Roasters Association moves forward 11

14 Institutions and Policies in Favour of Domestic Coffee Market Development 2009/10 in which the promotion of domestic coffee consumption is the main strategy. First activities including the development of the Domestic Coffee Consumption Strategy (UCDA, 2008), training of stakeholders in roasting and brewing techniques, inspecting roastaries, benchmarking coffee according to minimum quality standards and conducting market researches have already been carried out. To sum up, for a positive development of the Ugandan coffee industry, including an increasing domestic coffee consumption, a coffee policy is needed. Despite the presence of adequate associations and forums, which bring the coffee stakeholders together for sharing ideas, a coffee policy should support the necessities of coffee growers up to exporters. Although UCDA and UCRA started to conduct trainings and quality control inspections, an independent executive body for the professional implementation of promotion projects and knowledge management is lacking. Chapter 5 discusses how a Ugandan coffee school could fill this gap. 12

15 The Concept of a Ugandan Coffee School 5 The Concept of a Ugandan Coffee School The Chapters 2 to 4 illustrated various constraints on the Ugandan coffee market. The government, stakeholders and associations identified opportunities and strategies on how to develop the Coffee Market in Uganda. Development agencies and governmental bodies conduct many activities supporting coffee production, but the later stages of the value chain are still neglected. What is missing is an effective institution that focuses on education in the post-harvest coffee processing to increase the overall quality of Ugandan coffee. The same institution could improve coffee marketing in Uganda. A coffee school in Uganda could offer courses in line with identified skill gaps. 5.1 Overall Goal of the Ugandan Coffee School The newly established coffee school would aim at collecting and distributing knowledge about coffee quality, brewing and effects on health from regular coffee consumption. Furthermore, the school would provide the Ugandan coffee industry with well-educated domestic experts, with skills in quality management, specialty brewing and marketing. 5.2 Course Offer and other School Activities To be able to create an adequate course offer that meets the needs of the Ugandan coffee industry lacking skills have to be determined. Figure 3 shows on one side the lacking skills and on the other side the matching course offer or activity. Figure 3: Adequate course and activity offer of the Ugandan Coffee School Skill gap Quality management Innovative coffee processing Specialty coffee preparation Coffee marketing Course / Activity Quality control course Value-added course Barista training Event organization and entrepreneurship course Ugandan coffee consumers, as well as coffee exporters and international coffee roasters, ask for stable quality of Ugandan Robusta. In Uganda, domestic experts with broad knowledge about post-harvest quality management are lacking. Coffee processors and roasters frequently hire international experts for 13

16 The Concept of a Ugandan Coffee School consultancy visits. It would be better if coffee factories could employ local staffs who are able to ensure quality standards on a daily basis. The Ugandan coffee school could offer courses in quality management (pre-harvest, post-harvest, tasting, etc.) and value-added (roasting, packaging, certification etc.). Coffee shops, hotels and restaurants mainly offer instant coffee because they have neither the equipment (espresso-machine) nor employees with particular barista skills to be able to serve specialty coffee. Hence, the Ugandan coffee school will train basic and advanced baristas. In addition, the school would offer consultancy for coffee shops, hotels etc. who plan to buy new equipment for specialty coffee preparation. To encourage baristas to open their own coffee shops, newly educated baristas need additional business skills. Therefore, the school must include entrepreneurship training. Besides the courses above, which support innovative and good quality coffee production along the value chain, better marketing is essential to be able to increase domestic coffee consumption in Uganda. The school would be the main organizer of coffee promotion events, like a National Coffee Day and barista competitions. The events should attract a wide range of people (Chapter 5.3) and could offer an adequate platform to reintroduce Ugandan coffee traditions and to resolve correct information about the effects on health from regular coffee consumption. 5.3 Target Groups The main target groups are actors along the coffee value chain that will benefit from an increased domestic consumption and coffee products of higher quality. In particular the following groups will be addressed: Ugandan Coffee Consumers: Ugandan coffee drinkers could learn about coffee quality, tasting, preparation of specialty coffee at their own homes for either themselves or their guests. Ugandan Youth: In Uganda, 34% of the total urban population are youth between the age of 15 and 29 years 36. To increase domestic coffee consumption in a sustainable way marketing should focus on the youth of today, trying to set a new trend of coffee drinking. Coffee shops, Restaurants and Hotels: Not only coffee exporting companies benefit form quality coffee. In a coffee-producing country many customers expect to be served with a good cup of coffee in restaurants or hotels. Specialty coffee is usually not yet available in Ugandan restaurants and hotels. Even trained personnel admit that they require more training since brewing technology is changing rapidly. 36 UCDA: Domestic Coffee Consumption Strategy for Uganda. 14

17 The Concept of a Ugandan Coffee School Coffee Processors and Exporters: The processors and exporters need trained staff in quality assurance as well as coffee tasting. Domestic experts with the ability to distinguish the quality of coffee by tasting it are required. It would be legitimate to invest public money (ex. UCDA funded) into the establishment of the Ugandan Coffee School, since courses are open to most Ugandans. For viability and sustainability reasons, the school would have to generate additional income, for example through business services like consultancy for coffee shops or processing factories. The business services would have to be paid privately. 15

18 Conclusion 6 Conclusion The Ugandan coffee industry contributes both to farm household incomes and to the country s GDP. Further development of the domestic coffee market would positively influence Uganda s economy. Following the recommendation of International Coffee Organization (ICO), Uganda decided to support the domestic coffee market by promoting domestic coffee consumption. The UCDA s hypothesis that increasing coffee consumption in coffee-producing countries would stabilize the coffee world market price was refuted in Chapter 3.4. Nevertheless, an increase in domestic coffee consumption could contribute to better quality management and more value-added within the country borders. Although the Ugandan Coffee Development Authority (UCDA) claims to follow ICO guidelines to promote domestic coffee consumption, few activities are taking place. If UCDA could outsource certain tasks, so they would have more capacity to represent the coffee sector politically and to develop a coffee policy. Unfortunately, an independent institution with the capacity to offer specific education in coffee related areas and professionalized coffee marketing is non-existent. The establishment of a Ugandan Coffee School would be a possibility to offer public access to coffee related education. The coffee school could be partly financed with public money because courses would be open for most Ugandans. In addition, the existence of new domestic coffee experts would have a positive impact on the whole coffee sector (improved coffee quality, more value-added) which influences 25% of the population s livelihood (Chapter 2). If the school offered business services, private investors would have to be found. For example marketing campaigns should be supported by the private sector (coffee stakeholders). Instead of subsidizing particular coffee shops, UCDA could possibly engage an international franchise to support existing coffee shops and in order to enable new baristas to become small entrepreneurs by opening a coffee shop in their home-town. After all, the development of an increased coffee consumption in Uganda needs a marketing strategy of incredible persuasive power and will take a lot of time. 16

19 Literature Literature AKIYAMA, T. / BAFFES, J. / LARSON, D.F. and VARANGIS, P. (2001): Commodity Market Reforms; Lessons of Two Decades. The World Bank, Washington, D.C. CIA FACTBOOK (2010): Uganda. URL: EASTERN AFRICAN FINE COFFEES ASSOCIATION (EAFCA) (2010): Uganda The Origins of Robusta Coffee. URL: INTERNATIONAL COFFEE ORGANIZATION (2004): Lessons from the World Coffee Crisis: A Serious Problem for Sustainable Development. URL: INTERNATIONAL COFFEE ORGANIZATION (2005): A Step-by-step guide to promote coffee consumption in producing countries. URL: INTERNATIONAL COFFEE ORGANIZATION: Promoting Coffee Consumption. URL: INTERNATIONAL COFFEE ORGANIZATION: Statistics. URL: NATIONAL COFFEE STAKEHOLDERS MEETING (2009): Overview of the international and domestic coffee market. RUTHERFORD, M. A. (2006): Current Knowledge of Coffee Wilt Disease, a Major Constraint to Coffee Production in Africa. URL: UGANDA COFFEE DEVELOPMENT AUTHORITY (UCDA) (2007): Uganda Coffee Roasters Association moves forward. URL: UGANDA COFFEE DEVELOPMENT AUTHORITY (UCDA) (2007): Major Challenges to the Coffee Industry. URL: UGANDA COFFEE DEVELOPMENT AUTHORITY (UCDA) (2008): Domestic Coffee Consumption Strategy for Uganda. UGANDA COFFEE TRADE FEDERATION (2009): Time for the Coffee Policy. Uganda Coffee Talk, Vol.1, URL: 17

20 Literature UGANDA EXPORT PROMOTION BOARD (2006): Export Performance Analysis. URL: YOU, L. and BOLWIG, S. (2003): Alternative Growth Scenarios for Ugandan Coffee to 2020, International Food Policy Research Institute, URL: 18