Washed coffee beans on display. File photo
By Bamuturaki Musinguzi and Philomena Matsiko
Posted
Tuesday, March 1
2016 at
02:00
In Summary
Thieves have the capability to steal coffee while coffee trucks are in transit. Bamuturaki Musinguzi and Philomena Matsiko explain how this is eating into the country’s revenue
Much as Uganda’s coffee subsector registered growth in 2015, major players are uneasy over the increasing loss of revenue due to heightened theft cases (short-landings) of coffee exports and volatility of prices in the international market that continue to hamper the desired pace of growth.
Persistent drought, pests, low use of fertilisers, issues of access to credit and limited domestic consumption has also had an effect on the country’s coffee trade performance.
The Uganda Coffee Federation (UCF) has continuously registered cases of increasing theft in transit and short landings of Uganda coffees at point of destination. “This has led to a loss of revenue as exporters strive to meet their contractual obligations as well as retaining their clients in the extremely competitive coffee market,” it adds.
UCF notes that in the coffee year 2014/15, taking a sample of 15 cases from Ugandan exporters more than 91,000 kilogrammes of coffee valued at more than $198,000 (Shs673 million) was stolen. In all these cases, the coffee containers arrived at their point of destination with all seals intact; and sacks either filled with foreign materials like sand and small stones to compensate with the weight taken or left with less tonnage.
According to the UCF executive director, Betty Namwagala, coffee thefts date back to the times of the defunct Uganda Coffee Marketing Board.
“In our case (UCF), the thefts go back to 2008/9. Whenever there is an increase in the coffee price on the international market, the thefts escalate.”
“Our coffee is stolen while in transit by organised rackets who collude with truck drivers. We are losing 10 to 20 per cent of coffee off each 20-foot container. Buyers of Ugandan coffee may stop purchasing our coffee if the respective governments don’t fight this crime,” Kailash Natani, the managing director of Ugacof (U) Limited, one of Uganda’s major coffee exporters, says.
“We have not heard of coffee theft cases in transit of late. We have, however, heard of highway robberies and diversions. These have not been addressed to us as claims since they take place outside our jurisdiction,” the head of corporate affairs, Kenya Posts Authority, Bernard Osero told Daily Monitor.
As to the extent of this form of cargo theft, Osero, said: “The magnitude has not been quantified since they do not take place in areas under our jurisdiction. This can only be done by the Northern Corridor players like the Highway Police.”
UCF assumes that either: Coffee is stolen during transit between Uganda border and Mombasa Port with the stretch between Nakuru and Eldoret marked as the blackspot; or thieves either cut the hinges of the containers and weld them back or cut into containers, take out cargo, weld and re-paint them; or the coffee thieves have a cartel that is well-organised. They have equipment to make exact replicas of seals that are used to secure the containers; or the coffee thieves have the capability to steal coffee while the coffee truck is in transit.
Regarding those involved in this crime, Osero says it is the Kenyan police who get reports on these incidents and investigate them.
“However, possible suspects could be organised gangs, transporters or their agents (drivers or turn boys).”
Osero says Kenya Ports Authorit liaises with other security agents who operate along the Northern Corridor to ensure such incidents are investigated and measures put in place to prevent recurrences. Such agencies are Kenya Revenue Authority, Highway Police and Kenya Highway Authority, among others. “However, we only play a liaison role when such information is brought to our attention.”
“As a coffee exporting country, when our cargo is got missing at points of destination, we lose our reputation. The exporters have to compensate for the stolen coffee and if you can’t pay back, you may lose both the buyer and market,” Namwagala notes.
“We are advising our exporters to double insure at home and exports destination. If there are issues of repayment in case of thefts it reduces the costs of traveling to Europe, for example, to settle these matters,” said UCF programmes manager, Robert Musenze Mugenyi.
Recommendations
The Kenyan government partiularly Kenyan police should increase the number of highway patrols between the Ugandan border and Mombasa Port especially the blackspot between Nakuru and Eldoret.
Under the single customs territory, UCF argues that the Ugandan and Kenyan revenue bodies can track in and out bound cargo trucks. “This system could aid in tracking vehicles that are off track or those that have over-stayed in a particular location,” it suggests.
UCF also recommends that weigh bridges are used to track the tonnage differences in the contents.
According to Uganda Coffee Farmers Alliance (UCFA) executive manager Tony Mugoya, drought in the first quarter of 2015 affected production in some parts of the country and pests such as twig borer are still a major concern.
“Heavy rains have affected coffee harvesting, drying and marketing in some parts of the country. However, the effects of El-Nino have been generally less destructive than earlier feared,” Mugoya added.
The Uganda Coffee Development Authority (UCDA) managing director Henry Ngabirano also blamed price volatility, outbreaks of diseases, erratic weather patterns and limited domestic coffee consumption, as the industry’s hindrances in 2015.
Any benefits?
The subsector is yet to benefit from government’s investment over the past few years in road infrastructure as feeder roads which link coffee producers to the markets have not been given as much attention as the main roads, Natani says.
“The costs of doing coffee business are high due to poor infrastructure set-ups especially transporting coffee from the farms to the final markets,” Natani said.
Despite the challenges, the players indicate that the industry registered growth last year when the subsector was characterised by considerable successes at every stage in the value chain, gabirano observes.
“It is a year in which we had record coffee planting where about 110 million seedlings were generated and 86 million seedlings which had reached plantable stage were planted. It is where government increased funding for coffee planting by a factor of four. Coffee exportable production increased to the highest level of 4.1 million 60 kilogramme bags, only ever reached in 1995.”
“Farmer efforts in quality improvement came to fruition when Uganda coffee occupied the shelf space of Starbucks shops, the largest specialty coffee retailer in the world. This was after Uganda coffee passed the stringent quality evaluation systems and many standards set by Starbucks. This was a great confidence in the Ugandan farmers and it will mean better prices and income for the farmers,” Ngabirano added.
UCFA’s Mugoya argues that Uganda coffee showed growth and resilience in 2015 due to increased investment in processing factories.
Some statistics put the number of coffee growing households at 1.7 million, most of which are small scale farmers. Estimates put land under coffee at about 280,000 hectares in Uganda.
According to the UCDA monthly report for September 2015, cumulatively, coffee exports for October 2014 to September 2015 totalled 3.4 million bags worth $410 million (Shs1.4 trillion) compared to 3.5 million bags worth $394 million (Shs1.3 trillion) for October 2013 – September 2014, a decrease of 1.2 per cent in volume but a 4.2 per cent increase in value.
Uganda loses revenue due to its failure to add value to its coffee exports.
“Uganda could earn an extra 40 per cent in export revenues if it added value to its coffee by improving quality using the latest agricultural technology,” Natani says.
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