A caf­feine kick

While the world keeps re­fill­ing its cof­fee cup Africa hasn’t kept up. Now farm­ers and pol­icy-mak­ers are fo­cus­ing on this po­ten­tial cash-crop dy­namo with schemes to boost ex­ports and strengthen pro­cess­ing ca­pac­ity on the con­ti­nent

The Africa Report - - CONTENTS - Joseph Bu­rite in Kam­pala By

Farm­ers and pol­icy-mak­ers across Africa are now awake to the po­ten­tial of the cof­fee cash-crop, us­ing schemes to boost ex­ports and strengthen pro­cess­ing ca­pac­ity

The feeder route from the hard-sur­face road to Lake Nyabi­hoko in Uganda’s West­ern Re­gion district of Ntung­amo is un­spar­ingly bumpy over sev­eral kilo­me­ters. Charles Baru­ga­hare has been op­er­at­ing commuter ser­vices here, in the form of a Ja­panese pick-up truck fer­ry­ing pas­sen­gers to and from the area’s main trad­ing cen­tre, for 20 years. It is usu­ally easy find­ing a spot to grab dur­ing the jour­ney. But in days be­tween May and Au­gust, pas­sen­gers of­ten have to com­pete with loads of cof­fee bags head­ing to mills for pro­cess­ing, a first stop on their path to in­ter­na­tional mar­kets. For a greater part of his life, the cargo in his truck was the clos­est as­so­ci­a­tion Baru­ga­hare had with cof­fee, de­spite it be­ing a com­mon cash crop in the area. Re­cently though, seek­ing to di­ver­sify his in­come stream from cat­tle rear­ing and a liquor store and tempted by gov­ern­ment plant­ing sup­plies, the fa­ther-of-three planted four acres of ro­busta cof­fee. “These are the things left for us to do now,” Baru­ga­hare says at his hill­top house over­look­ing a lake. “It’s not much. It’s just for a start,” he adds while gaz­ing at his plan­ta­tion. In his small way, Baru­ga­hare is con­tribut­ing to African coun­tries’ plans to raise cof­fee pro­duc­tion, which is on course to reach about 16 mil­lion 60kg bags this sea­son. If more farm­ers turn to the crop, the con­ti­nent could

raise pro­duc­tion by an es­ti­mated three mil­lion 60kg bags an­nu­ally, in­dus­try of­fi­cials es­ti­mate. Most of the con­ti­nent’s pro­duc­tion is by small­holder farm­ers rather than big in­dus­trial plan­ta­tions.

NEW LEG­IS­LA­TION

To achieve that tar­get, Africa’s two main pro­duc­ers, Ethiopia and Uganda, are fo­cus­ing on aban­doned cof­fee farms for re­ha­bil­i­ta­tion. Farm­ers in Kenya are plant­ing new va­ri­eties and ex­pand­ing in new ar­eas, es­pe­cially to­wards the west, to re­duce the risk of pests and dis­eases, ex­plains Ishak Lukenge, chair­man of the Africa Fine Cof­fees As­so­ci­a­tion (AFCA). The Ugan­dan gov­ern­ment is also fast-track­ing new leg­is­la­tion that seeks to im­prove farm oper­a­tions, or­gan­ise farm­ers and im­prove qual­ity so as to in­crease profit mar­gins and ac­cess to mar­ket. The suc­cess of ini­tia­tives aimed at in­creas­ing pro­duc­tion will likely re­vive the con­ti­nent’s medium- and long-term ex­port prospects to match or even sur­pass lev­els at­tained in 1990, Lukenge says. With pro­duc­tion that stag­nated for more than 20 years, Africa’s share of global output de­creased from 36.6% in 1990 to an es­ti­mated 10.8% in 2016. Its share of the to­tal value of global cof­fee ex­ports fell from 21% in 1990 to 9.4% in 2016. This took place as global de­mand in­creased by more than 50%, from 100 mil­lion bags to 159 mil­lion bags pre­dicted for the year 2017/2018, ac­cord­ing to the In­ter­na­tional Cof­fee Or­gani z at i o n. In 2 0 1 7 / 2 0 1 8 , output in Africa is ex­pected to rise 3.2% to 17.66 mil­lion bags.

Still, Africa’s pro­duc­ers, which amount to around seven mil­lion house­holds, are largely miss­ing out on op­por­tu­ni­ties brought by global growth in de­mand that re­sulted from in­creased con­sump­tion in emerg­ing economies, José Sette, ICO ex­ec­u­tive di­rec­tor told me­dia in Fe­bru­ary. Ac­tors in the African sec­tor want to boost cof­fee drink­ing at home. “At AFCA, what we have re­alised is that we need to pro­mote more cof­fee con­sump­tion within the African re­gion,” says Lukenge. “We have to add value here and trade within the African re­gion, not Europe.” So far, though, there is lit­tle evidence of change on the ground, and most of the roast­ing, blend­ing and pack­ag­ing is still done out­side the con­ti­nent. Pri­vate-eq­uity firm The Abraaj Group is bet­ting big that there is un­tapped de­mand for cof­fee on the con­ti­nent. It pur­chased Kenya’s Java House cof­fee chain last year and the com­pany an­nounced in May that it has ma­jor ex­pan­sion plans on the con­ti­nent. As of 2016/2017, Africa’s cof­fee con­sump­tion stood at 11 mil­lion bags, with an­nual growth av­er­ag­ing 1.9% since 2013/2014, ac­cord­ing to ICO data. Ethiopia, the largest African cof­fee con­sumer, dr inks about half of the 7.65 mil­lion bags it pro­duces. Su­dan fol­lows with 700,000 bags per an­num, and South Africa rounds off the top three con­sumers at 500,000 bags. Nige­ria, Africa’s sec­ond-largest econ­omy, con­sumes all of its neg­li­gi­ble pro­duc­tion. With its large pop­u­la­tion, it is seen as a po­ten­tial mar­ket that pro­duc­ers like Kenya are look­ing to tap. A grow­ing youth mar­ket could mean Africa will soon be con­sum­ing 40 mil­lion bags of cof­fee a year, the AFCA’S Lukenge es­ti­mates.

CLI­MATE CHAL­LENGES

Africa’s pro­duc­tion hinges on a favourable cli­mate, a fac­tor that al­ready poses threats. In Ethiopia, grow­ers have re­ported de­layed har­vests as cli­mate change in­ter­fered with bean ripen­ing. Output tar­gets have also been de­railed in Tan­za­nia by sea­sonal un­pred­i­ca­bil­ity, forc­ing the East African coun­try to re­vise its strate­gic plan, says Primus Ki­ma­ryo, act­ing di­rec­tor gen­eral of Tan­za­nia cof­fee board. Tan­za­nia’s cof­fee pro­duc­tion dropped to 780,000 bags in 2016/2017 from 1.03 mil­lion bags in 2015/2016. It is fore­cast to fall fur­ther to 716,000 bags in 2017/2018. This makes it very dif­fi­cult for farm­ers to meet the gov­ern­ment’s tar­get of 1.6 mil­lion bags by 2021. Struc­tural lim­i­ta­tions in some re­gions also con­strain the sec­tor. “Ex­port pro­cesses, which in­clude pric­ing, lo­gis­tics, fi­nance, risk man­age­ment and trans­port, are a real chal­lenge for East Africa,” says cof­fee trader Phil Sch­luter. “It’s the rea­son why cof­fee some­times takes four-to-five months to leave the re­gion and re­al­is­tic ship­ping times are four-to-five months af­ter har­vest, whereas in Cen­tral Amer­ica [they are] about half that or less,” he says. Uganda’s farm­ers have their own ob­sta­cles. “The only dis­ad­van­tage we have is the [price of] freight ,” says the AFC A’s Lukenge. “We are land­locked. From Kam­pala to Mom­basa costs about $110 per tonne. When you go to Ethiopia, from Addis to Dji­bouti, it is $30 per tonne. So we have that dis­ad­van­tage of be­ing away from the sea.”

AN AW­FUL LOT OF COF­FEE

Across the con­ti­nent, small­holder farm­ers would ben­e­fit if gov­ern­ments rolled out more ex­ten­sion ser­vices and other poli­cies that fo­cused on all links in the pro­duc­tion-to-ex­port chain. Sch­luter says farm­ers like Baru­ga­hare stand to earn higher prices if they im­prove the post-har­vest han­dling of beans. They could triple from an av­er­age of $0.91 per pound cur­rently to $2.3-$3 per pound, Sch lute r ar­gues. Sch­luter also sees po­ten­tial for an 86% in­crease in African yields if proper va­ri­eties and agron­omy are ap­plied. Along with post-har­vest pro­cess­ing ,“this is where money should be spent by African pro­duc­ers,” he says. In­deed, Uganda is start­ing to reap the ben­e­fits of such im­prove­ments. In 2013, the gov­ern­ment de­ployed the army to con­duct agri­cul­tural ex­ten­sion ser­vices, which saw sol­diers of­fer im­proved cof­fee seedlings and agron­omy ad­vice. Pro­duc­tion had long stag­nated at 3.6 mil­lion bags and then the coun­try in­creased output to 4.96 mil­lion bags in 2015/2016 and 5.1 mil­lion in 2016/2017. Pol­icy-mak­ers hope the coun­try will lead the charge for a re­vival of Africa’s output, tar­get­ing a har­vest of 20 mil­lion bags by 2030 – a surge that could spur the con­ti­nent to lev­els closer to in­dus­try lead­ers Brazil and Viet­nam. But Brazil re­mains king and its ex­pected record har­vest this year is al­ready caus­ing jit­ters as prices are likely to fall. There are bound to be bumps in the road for African cof­fee grow­ers who want a big­ger stake in a highly com­pet­i­tive field against strong agri­cul­tural pow­er­houses. And fall­ing prices will test those farm­ers’ com­mit­ment to cof­fee in the next few years.

The Ugan­dan gov­ern­ment is pro­mot­ing cof­fee grow­ing in the West­ern Re­gion, known for its Ara­bica beans

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