Uganda needs a caffeine fix

Vietnam’s rise

Like Uganda, 85%-90% of the coffee in Vietnam is produced by smallholder farmers, who had 670,000 hectares of agricultural land under coffee production in 2015. Today, Vietnam is the second largest coffee producer after Brazil, producing 27.5 million bags of coffee in the 2015/16 planting season. Since 2007, coffee has become the country’s second largest source of export revenue.

Coffee was first introduced to Vietnam in 1857. It took until 1989 for increased production and regular trade in coffee to take off. Like Uganda, the increase in Vietnamese coffee production also followed the implementation of policies and reforms that liberalised the sector. For example, reform of land administration meant stronger property rights, allowing individual producers to own the titles to their land.

In addition, progressive dismantling of state-owned enterprises broke up the monopoly on agricultural trade.

And Vietnam put in place a number of interventions to address productivity levels. This resulted in Vietnam’s agricultural production being far more capital and input intensive than Uganda’s resulting in higher yields per hectare. For example, in the 2005/2006 planting season, Vietnam had 257 tractors per square kilometre of arable land, compared to Uganda’s 9.

Equally important is fertiliser use. For the years that data is available, it appears that Vietnam was using 300 times more fertiliser than Uganda, per hectare of arable land. Fertiliser use has a significant impact on the yield per hectare.

For its part, Ugandan productivity has been poor. Uganda’s 2008 agricultural census shows that the yield gap from low input use in the coffee sector amounts to 2734kg/hectare. This means that on average, farmers are producing 396kg/hectare when they could be producing 3130kg/hectare.

Determining quality

This phenomenon of low input use isn’t confined to Uganda’s coffee sector. It’s a systemic feature of Uganda’s agricultural sector at large. For example, recent research on maize inputs showed major shortfalls in quality. The findings showed that 30% of nutrients were missing from fertiliser, and hybrid seed contained less than 50% of authentic material at retail level.

Although no similar study has been conducted for the Ugandan coffee sector, there are numerous examples that can be used as reference, particularly since the introduction of new higher yielding varieties of coffee plants. For example, in 1992 the government launched a national coffee replanting programme to replace old coffee trees with newer, higher yielding varieties. The programme was ended in 2004 due to the low survival rate of the plantlets.

Uganda’s untapped potential

There are, of course, other theories and reasons that further compound the differences between the two countries. One is that Vietnam is deemed to have a far more conducive environment for setting up businesses than Uganda. And the Vietnamese government’s assistance to the agricultural sector since the 1990s has been more supportive, helping the coffee sector withstand negative shocks due to weather and price volatility than has been the case in Uganda.

Notwithstanding these differences, the success of Vietnam’s coffee sector hints at the untapped potential that lies in Uganda’s coffee industry. To achieve similar growth, it’s imperative to improve productivity via increased and improved agricultural inputs, fostering a supportive business environment and adopting newer technologies for smallholder farmers.

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Astrid R.N. Haas is Senior Country Economist, International Growth Centre.

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Source: the conversation Africa