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Coffee producers trapped by declining value

The value of Ugandan coffee exports, which account for 30 percent of the country's total exports despite a steep decline in the last decade, has plummeted by almost one-third in the year to end-September compared to the previous period, AFP news agency reported on Wednesday, 3 October. Uganda exported 3.1 million mt in the past year, up from 2.9 million mt the year before, the report added. "This [loss of value] is all self-inflicted, because, as producers, we have failed to control supply. We have too much coffee on the market," it quoted William Naggaga of the Uganda Coffee Development Authority as saying. Coffee-producing countries recently abandoned an attempt to retain some of their produce from the market (which would boost prices), because - other than Brazil, Colombia and Costa Rica they could not afford to do so, Naggaga said. "Other countries did not have the money required and had to increase volumes for their economies to remain floating," he added. Uganda earned US $432 million from coffee exports in the 1994/95 season, but that fell steadily year on year to a value of US $276 million in 1997/98, according to Naggaga. "This can show you the collapse in the coffee trade," he added. Coffee prices fell to their lowest levels in 26 years on Monday, 1 October, due to over-supply and a poor outlook for consumer spending in he months to come, AFP reported. Average coffee prices have fallen to 30-year lows as consumption growth has failed to keep pace with surging production, and schemes such as export retention plans have so far failed to restore the balance, according to industry analysts. Some producing countries in Central America and Africa, such as Uganda and Kenya, had partly participated in this retention, while Indonesia and India had not, despite committing themselves to do so, they said. Members of the International Coffee Organisation are considering means of eliminating low-quality coffees from the beverages market and boosting the overall coffee sector by diverting them to other uses, including animal feed, fuel and fertiliser, according to news reports. But the diversion scheme would suffer from the same enforcement and monitoring problems as the retention scheme, according to analysts. Neither would diversion itself address the fundamental problem of excess production, but should be used in conjunction with a long-term strategy to reduce supply, such as providing farmers with incentives to reduce the area under coffee cultivation, they warned. Yet, Uganda is planning to dramatically increase production, planting up to 44.5 million high-yield trees in line with President Yoweri Museveni's stated intention to have the country exporting 12 million bags by the year 2005, AFP reported on Wednesday.

This article was produced by IRIN News while it was part of the United Nations Office for the Coordination of Humanitarian Affairs. Please send queries on copyright or liability to the UN. For more information: https://shop.un.org/rights-permissions

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