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Coffee Value Chain Analysis Opportunities for Youth Employment in Uganda RURAL EMPLOYMENT RURAL EMPLOYMENT KNOWLEDGE MATERIALS – VALUE CHAINS

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Coffee Value Chain Analysis Opportunities for Youth Employment in Uganda RURAL EMPLOYMENT RURAL EMPLOYMENT KNOWLEDGE MATERIALS – VALUE CHAINS KNOWLEDGE MATERIALS – VALUE CHAINS Coffee value chain analysis Opportunities for youth employment in Uganda RURAL EMPLOYMENT RURAL EMPLOYMENT KNOWLEDGE MATERIALS – VALUE CHAINS Coffee value chain analysis Opportunities for youth employment in Uganda RURAL EMPLOYMENT by Francis Mwesigye and Hanh Nguyen Agrifood Economics Division, Food and Agriculture Organization of the United Nations Food and Agriculture Organization of the United Nations Rome, 2020 Required citation Mwesigye, F & Nguyen, H. 2020. Coffee value chain analysis: Opportunities for youth employment in Uganda. Rome, FAO. https://doi.org/10.4060/cb0413en The designations employed and the presentation of material in this information product do not imply the expression of any opinion whatsoever on the part of the Food and Agriculture Organization of the United Nations (FAO) concerning the legal or development status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. Dashed lines on maps represent approximate border lines for which there may not yet be full agreement. The mention of specific companies or products of manufacturers, whether or not these have been patented, does not imply that these have been endorsed or recommended by FAO in preference to others of a similar nature that are not mentioned. The views expressed in this information product are those of the author(s) and do not necessarily reflect the views or policies of FAO. ISBN 978-92-5-133098-2 © FAO, 2020 Some rights reserved. This work is made available under the Creative Commons Attribution− NonCommercial−ShareAlike 3.0 IGO licence (CC BY−NC−SA 3.0 IGO; https://creativecommons. org/licenses/by−nc−sa/3.0/igo/legalcode). Under the terms of this licence, this work may be copied, redistributed and adapted for non− commercial purposes, provided that the work is appropriately cited. In any use of this work, there should be no suggestion that FAO endorses any specific organization, products or services. The use of the FAO logo is not permitted. If the work is adapted, then it must be licensed under the same or equivalent Creative Commons licence. If a translation of this work is created, it must include the following disclaimer along with the required citation: “This translation was not created by the Food and Agriculture Organization of the United Nations (FAO). FAO is not responsible for the content or accuracy of this translation. The original [Language] edition shall be the authoritative edition.” Disputes arising under the licence that cannot be settled amicably will be resolved by mediation and arbitration as described in Article 8 of the licence except as otherwise provided herein. The applicable mediation rules will be the mediation rules of the World Intellectual Property Organization http://www.wipo.int/amc/en/mediation/rules and any arbitration will be conducted in accordance with the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL). Third−party materials. Users wishing to reuse material from this work that is attributed to a third party, such as tables, figures or images, are responsible for determining whether permission is needed for that reuse and for obtaining permission from the copyright holder. The risk of claims resulting from infringement of any third−party−owned component in the work rests solely with the user. Sales, rights and licensing. FAO information products are available on the FAO website (www. fao.org/publications) and can be purchased through publications−[email protected]. Requests for commercial use should be submitted via: www.fao.org/contact−us/licence−request. Queries regarding rights and licensing should be submitted to: [email protected]. Cover photo: ©CURAD Contents Tables and figures V Acronyms VII Acknowledgments IX Executive summary X 1. Introduction 1 1.1 Overview of the coffee sub-sector 2 1.2 Purpose of the report 3 1.3 Background on value chain selection 3 1.4 Target audience 4 2. Methodology 7 2.1 Conceptual framework 7 2.2 Scope of the study 7 2.3 Time and people involved 8 2.4 Study design and sampling methods 9 2.4.1. End-market 9 2.4.2. Production 9 2.4.3. Aggregation 10 2.4.4. Processing 10 2.4.5. Distribution 11 2.4.6. Extended value chain (Support service provision) 11 3. Analysis 13 3.1 End-market analysis 13 3.1.1 Dynamics of the global coffee market 13 3.1.2 Uganda’s coffee trading patterns 17 3.1.3 Traditional markets 18 3.1.4 Emerging markets 19 3.1.5 Domestic market 21 3.1.6 Conclusion 21 3.2 Value chain map 23 3.3 Core value chain functions 24 3.3.1 Production 24 3.3.2 Aggregation of coffee 35 3.3.3 Processing 38 III 3.3.4 Roasting and retail 44 3.4 Value chain governance 47 3.5 Extended value chain: support services 49 3.5.1 Seedling multiplication 49 3.5.2 Provision of agro-inputs 52 3.5.3 Access to finance 54 3.6 Enabling environment 57 3.6.1 Policies, regulations and laws 58 3.6.2 Socio-cultural norms 60 3.6.3 Physical infrastructures 60 3.6.4 Organization and cooperation 62 4. Identification of systemic constraints and upgrading opportunities 65 4.1 Root causes of limited youth employment in the coffee value chain 65 4.2 Upgrading and investment opportunities: Identifying the potential for youth employment and decent work 66 4.2.1 Opportunities related to the core value chain 66 4.2.2 Opportunities related to the extended value chain (service provision) 67 4.2.3 Opportunities related to the enabling environment 68 4.3 SWOT analysis 68 5. Proposed strategic directions for enhancing youth employment in the coffee value chain 71 5.1 Vision 71 5.2 Strategic recommendations 71 5.3 Proposed interventions outlining immediate, medium-term and long-term actions 74 5.3.1 Immediate (1–2 years) policy and strategic actions 74 5.3.2 Medium-term (2–5 years) policy and strategic actions 75 5.3.3 Long-term (5 years and above) policy and strategic actions 75 References 77 Annexes 81 IV Tables and figures Tables 1 Sampling of study areas 10 2 Sample size per value chain actor and provider of physical inputs 11 3 Identified export markets for Ugandan coffee 22 4 Cost of production and margins for a newly established hectare of Robusta coffee garden (UGX) 33 5 Cost of production and margins for a newly established hectare of Arabica coffee garden (UGX) 34 6 Coffee profitability per hectare of coffee garden (UGX) 35 7 Characteristics of coffee aggregators 36 8 Level of youth employment in a typical coffee aggregation business 37 9 Costs and profits in coffee aggregation (for a typical business) 38 10 Steps of secondary processing of coffee beans 42 11 Seedling multiplication arrangement and formalization 50 12 Youth and women employment in seedling multiplication 51 13 Costs of seedling multiplication in the main season 51 14 Seed sales and revenue (UGX) 52 15 Characteristics of agro-input dealers 53 16 Employment provided by agro-input dealers 54 17 Profitability of a typical agro-input dealership business (UGX) 54 18 Strategic recommendations 73 Figures 1 Population size and annual population growth rate for Uganda 1 2 Coffee density per district and type 8 3 World’s top green coffee exporting countries 14 4 World’s top coffee importing countries 14 5 Top international traders and roasters 15 6 International Coffee Organization (ICO) composite indicator daily prices 15 7 ICO composite indicator daily prices 16 8 Uganda coffee exports in volume and value 17 9 Top destinations for Ugandan coffee 18 10 Fresh coffee consumption in selected Asian countries (2003–2017) 20 11 Coffee value chain map for Uganda 23 V 12 Average yield (kg/acre) of Robusta and Arabica smallholder farmers by category 25 13 Coffee intercropped with banana in Bukomansimbi District 26 14 Percentage of production activities performed by different age cohorts 28 15 On-farm activities done by youth and women 29 16 Different production practices 30 17 Post-harvest coffee handling 31 18 Youth removing dried coffee on tarpaulins 31 19 Percentage of aggregators selling to different channels 36 20 Machines used in primary processing 39 21 Target markets for processed coffee 39 22 Percentage of primary processing activities performed by youth and women in two study areas 40 23 Processing challenges 41 24 Coffee processing factory 43 25 A coffee roasting plant 45 26 Several Ugandan coffee brands on display in supermarket shelves 46 27 An Inspire Africa mobile coffee booth and an Endiro coffee shop 47 28 Coffee seedling gardens 49 29 Organizations supporting seedling production 50 30 An agro-input shop in Bukomansimbi 52 31 Saving mechanisms 55 32 Sources of credit in Uganda 55 33 Access to finance by the main value chain payers 56 34 Sources of credit for seedling multipliers and agro-input dealers 57 VI Acronyms ACF Agricultural Credit Facility ACPCU Ankole Coffee Producers Co-operative Ltd AFCA African Fine Coffee Association BCU Bugisu Cooperative Union CBI Centre for the Promotion of Imports from Developing Countries CECOFA Central Coffee Farmers Association COMTRADE Commodity Trade Statistics Database CURAD Consortium for enhancing University Responsiveness to Agribusiness Development CSR Corporate Social Responsibility DRE Decent Rural Employment DRUGAR Natural Dry Uganda Arabica GPS Global Positioning System EPRC Economic Policy Research Centre ESA Agrifood Economics Division of FAO ESFIM Empowering Smallholder Farmers in Markets FAO Food and Agriculture Organization of the United Nations FAQ Fair Average Quality FGDs Focus Group Discussions FOT Free on Truck FTBIC Food Technology
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