Coffee & agri-products
Coffee is Uganda’s main export product: it contributes around 2.5% to global coffee production. Only 5-10% of production is consumed locally. Annual exports are worth around 425M$ and the main export destinations are the EU (Germany, Italy, Spain, Belgium), Sudan, Singapore and the US. The Netherlands represents only 2.5% of the Ugandan coffee export market. Uganda’s coffee export market is controlled by 29 national and multi-national companies, 10 of which control about 85% of the export market. The leading company (Ugacof (U), Ltd) controlled 15% of the coffee export in 2011 (UCDA, 2011).
Most of Uganda’s coffee is produced by approximately 500.000 smallholder farmers. These smallholder farmers tend to have relatively low productivity due to limited use of inputs and technology. The main coffee types are Arabica and Robusta (grown in ratio of 1:4). Most smallholders also grow other non-cash crops such as bananas and beans for consumption.
The largest part of farm work is done by family members. Production has decreased due to draughts in recent years: it is thought that climate change plays a role in this process (FAO, 2012). A 2008 study by Fafchamps and Vargas Hill suggest that smallholder farmers in Uganda are usually not well informed about market prices, allowing middle-men traders to benefit from high prices in the international coffee market. Follow-up research (2010) suggests that provision of market info would be desirable.
It is estimated that 2-3% of the European market is currently consisting of specialty coffees. Other research suggests that the share of specialty coffee in Western markets is even higher. Differences between these estimates are partly due to the fact that the product class of ‘specialty coffee’ is not strictly demarcated. However, despite its growing popularity in the west, recent studies suggest that organic, fair-trade & specialty coffee production is not unequivocally beneficial for smallholder producers in developing countries.
Proposed downsides of the fair-trade model include (i) a focus on low-intensity production methods which typically are less productive, (ii) entry barriers to joining the scheme for poor smallholder producers and (iii) the fact that only a very small part of the price premium ends up in the hands of smallholder producers (Claar & Haight, 2015).
A range of stakeholders have implemented policies and programs to support the development of the Ugandan coffee sector, notably:
CBI activities in the coffee sector in Uganda are part of the wider “Export Development and Promotion Programme Natural Ingredients for East & Southern Africa”, which runs from 2011-2016. Within the Ugandan coffee sector, CBI focuses on the specialty coffee segment, which represents a growing market in Europe and other foreign markets. This program provides export promotion support to 14 SMEs and capacity building to 4 BSOs (UCA, UCF, ACA and Nucafe). Focus points of the program include: (i) providing technical, scientific and commercial information and trainings to SMEs, (ii) building capacity in SMEs to meet production quantity and quality requirements for EU market, (iii) building institutional capacity in BSOs to support the coffee sector.
PUM has implemented over 100 advisory support missions in Uganda in the period 2012-2014. These missions provided support to SMEs in a wide range of sectors, including agri- and horticulture, livestock, energy, healthcare and education. Of the missions in in the agri- and horticulture sector, a few targeted SMEs that specifically focused on coffee, while several also targeted firms involved in the production of other tropical fruits such as mango and pineapple. Given that PUM focuses on slightly smaller SMEs than CBI, most of these firms are not (yet) involved in the exporting of their produce so missions focus mainly on technical and managerial challenges.
The Uganda government
Various Ugandan public agencies are involved in the coffee sector. The Ministry of Agriculture, Animal Industries and Fisheries provides the regulatory framework in which the coffee sector operates. The Uganda Coffee Development Authority is the key public agency involved in the sector and its objectives include the promotion and provision of: (i) international marketing of coffee, (ii) quality control, (iii) research & technical extension services and (iv): domestic consumption of coffee.
International development agencies
Various other international development agencies are / have recently been involved in the coffee sector in Uganda, including: (i) USAID with its “Uganda Feed the Future Program” that provides technical, financial, business and export-marketing support to coffee producing firms, (ii) DANIDA with its “Business Partnerships Program” that links Ugandan producers to European/Danish importers and (iii) UNDP and the Swedish government with a program that provides advice to farmers on how to deal with the effects of climate changes on their production, for example: improving storage facilities, using stress-resistant crop varieties and improving irrigation schemes.
CBI target group
In its Uganda specialty coffee export-coaching program, CBI works with 17 coffee producing organizations that were selected from a set of 20 firms (of which 3 failed to qualify for the program, due to lack in motivation and/or capacity to enter the export market). The companies supported through the program are mostly producer-owned cooperative organizations that are already exporting standard coffee (rather than specialty coffee) to various foreign markets, including some companies that export to the EU.
As per the audit data, most of these firms have between 25-100 employees, although most organization work with many more ‘affiliated’ farmers that actually grow the coffee. The typical structure of the CBI-supported organizations is that they have employees that are involved in the buying, processing and selling of the coffee, and that the actual production is conducted by smallholder farmers with whom the exporting organizations are closely linked, and to whom they often provide a range of services in the domain of technical support.
PUM target group
Given its wide coverage of sectors and sub-sectors in its countries of operation, there is no singular “agricultural-sector” target group for PUM. Rather, the organization works with SMEs that meet its basic hard & soft criteria (10-250 employees, <€10M annual turnover) majority locally owned, operational for 2+ years, committed to PUM mission). Following these criteria, PUM has implemented over 100 missions to around 80 SMEs in Uganda in the period 2013-14. Of these, 15 SMEs are operating in the agricultural sector, of which around 5 were specifically active in the horticultural sub-sector. Given the thematic focus for the CBI-part of the mission on coffee it was decided that the horticultural-focused SMEs that were supported by PUM where the most suitable candidates for inclusion in this case study. These SMEs were targeted in the interviews during the first mission, as well as a non-supported firm that was considering working with PUM in the near future.
Most of these SMEs have between 10-50 employees and are between 5-25 years old. They are active in the processing of coffee, fruits, nuts as well as the production of seeds. Furthermore, an increasing number of firms is diversifying its income by so-called “agro-tourism” and educational trips for students to learn more about agri/horti-culture.
 Fafchamps, Marcel, and Ruth Vargas Hill. “Price transmission and trader entry in domestic commodity markets.” Economic Development and Cultural Change56.4 (2008): 729-766.
 CBI: http://www.cbi.eu/sites/default/files/study/tailored-study-uganda-europe-trends-segments-coffee-2014.pdf
 Fair Trade organic coffee production in Nicaragua — Sustainable development or a poverty trap? Ecological Economics (2009)
 Dragusanu, Raluca E., Daniele Giovannucci, and Nathan Nunn. The economics of fair trade. No. w20357. National Bureau of Economic Research, 2014.
 Journal of Economic Perspectives—Volume 29, Number 1—Winter 2015—Pages 215–216