In June 2023, Uganda achieved a significant milestone in its coffee industry, earning a record Shs330.5bn from coffee exports. This amount was generated from the sale of 563,832 60-kilo bags of coffee, with Robusta and Arabica varieties contributing substantially to the country’s export revenue. The remarkable increase in both quantity and value of coffee exports indicates a positive trend for Uganda’s coffee sector, fueled by favorable global prices and a bountiful harvest in specific regions. However, challenges, such as pest infestations and civil unrest, have impacted some aspects of the industry. This blog post delves into the details of Uganda’s coffee exports for June 2023, the export destinations, key players, and the global coffee market outlook.
Record-Breaking Coffee Exports in June 2023:
Uganda Coffee Development Authority (UCDA) reported that Uganda earned Shs330.5bn from coffee exports in June 2023. This revenue was derived from the sale of 489,597 bags of Robusta valued at US$73.88 million and 74,235 bags of Arabica valued at US$16.68 million. The overall export performance witnessed a 6.31% increase in quantity and an 8.08% increase in value compared to the same month in the previous year. Specifically, Robusta exports saw a significant boost of 10.22% in quantity and 21.16% in value compared to June 2022. However, Arabica exports experienced a decline of 13.85% in quantity and 26.89% in value during the same period.
Factors Behind the Export Performance:
The increase in Robusta exports was attributed to a successful crop harvest in the South-Western region and favorable global coffee prices, which encouraged exporters to release their stocks. On the other hand, the decline in Arabica exports’ value was influenced by a potentially high output from Brazil in Coffee Year 2023/24, driven by favorable harvest conditions.
Effects of Drought and Civil War on Export Figures:
Coffee exports for the financial year 2022/23 totaled 5.76 million bags worth US$845.94 million, marking an 8% decrease in quantity and a 2% decrease in value compared to the previous financial year. This decline was partly caused by drought and the prevalence of pests and diseases in Robusta growing areas. Additionally, exports to Sudan decreased significantly during the second half of the financial year due to the ongoing civil war in the region.
Exporter Performance and Competition:
Among the exporters, Ugacof (U) Ltd held the highest market share of 13.00%, followed by Ideal Quality Commodities Ltd with 10.30%, and Olam Uganda Ltd with 9.54%. However, the top 10 exporters’ overall market share decreased to 71% compared to the previous month’s 76%, reflecting increasing competition in the coffee market.
Destination of Uganda Coffee Exports:
Italy remained the primary market for Ugandan coffee with a market share of 37.68%, followed by Sudan (15.77%), Germany (12.13%), India (7.85%), and Belgium (3.85%). However, exports to Africa saw a significant increase, accounting for 18% of total coffee exports in June 2023.
Global Coffee Market Outlook:
The world coffee production for 2023/24 is forecasted to increase by 4.3 million bags to 174.3 million bags, primarily due to higher output from Brazil and Vietnam. Global coffee consumption is projected to reach 170.2 million bags, with substantial gains in the European Union, the United States, and Brazil. Additionally, coffee bean exports are expected to rise to 122.2 million bags, fueled by robust shipments from Brazil.
Local Situation and Outlook for July 2023:
Farm gate prices for different coffee varieties in June 2023 ranged from Shs. 4,000 to 4,500 per kilo for Robusta dry cherries, Shs. 8,000 to 8,500 per kilo for Fair Average Quality (FAQ), Shs. 10,000 to 11,000 per kilo for Arabica parchment, and Shs. 9,500 to 10,000 per kilo for Drugar from Kasese. Looking ahead, UCDA projected coffee exports of 550,000 bags for July 2023, with the main harvesting season in Greater Masaka and South-Western regions approaching its conclusion.
Conclusion:
Uganda’s coffee industry experienced a prosperous month in June 2023, earning a record Shs330.5bn from coffee exports. The growth in both quantity and value of coffee exports was driven by favorable global prices and a robust harvest in certain regions. Despite challenges like pest infestations and civil unrest affecting some aspects of the industry, Uganda remains a major player in the global coffee market. As the country continues to adapt to changing market conditions and competition, its coffee sector is likely to maintain its significance in the world coffee market.
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