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October 17, 2011

Uganda coffee price boom

Prices of Arabica coffee have risen again in Bugisu region, eastern Uganda, despite earlier predictions from the Uganda Coffee Development Authority that the bumper season would be affected by the landslide tragedies nearly two months ago.

The price increment comes in the wake of the August 29 landslides in Bulambuli district that left scores of villagers dead and around 1,300 acres of coffee plantations destroyed.

The UCDA had predicted low prices, saying the landslides had washed off the top soils, leaving behind rocky soils. Each acre of Arabica coffee takes up to 680 coffee trees. This, the UCDA said, indicates that more than 884, 000 coffee trees were destroyed in the tragedy.

Though prices slightly dropped at the beginning of the harvesting season in July, the premium parchment has risen again to $3.3 per kg, up from $2.8. Ordinary parchment now trades at $2.8 per kg, up from $2.4.

Coffee exporters in the region attribute the rise in prices to scarcity due to delayed harvest. At the peak of the coffee scarcity in June this year, prices of premium Arabica shot up to $3.8 per kg from $2.6.

Umar Maleh, communications officer for Kyagalanyi Coffee Ltd, a local coffee export firm, said whereas the harvest season was expected to reach its peak this month, it had been delayed.

“The coffee trees are full of green and yellow cherries in the process of ripening. The red cherries are very scanty and the competition for them from purchasing firms is high,’’ Maleh said, adding: “Unlike the previous year, when each of our five washing stations in the coffee producing districts used to collect more than six metric tonnes of parchment per day, we are now finding it difficult to collect even a single tonne.’’

 Bugisu region is the biggest producer of Arabica coffee in Uganda with most of it exported to European markets and China.

Arabica coffee has two harvesting seasons with the peak season stretching from August to early February. The fry crop (remnants of the cherries from the peak season) is harvested from March to May before the trees start blooming.

Mr Maleh said whereas the scarcity can partly be attributed to the floods and landslides that have hit the coffee producing areas of Bulambuli, Sironko, Mbale, Kapchorwa and Kween, the long term effect on the trade could be disastrous.
‘’A single tree of coffee can produce up to five kg of parchment and takes three to five years to achieve that maturity. With that amount of acreage destroyed, it will take the industry a long time to recover,’’ Mr Maleh said.

However, William Wepukhulu, the UCDA eastern regional manager, downplayed the impact of the landslides on the local market prices, arguing that the Arabica coffee prices are determined by market forces at the international market and the supply from the world’s big producers such as Brazil and Costa Rica. 

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