The Coffee yearbook 2014/15
The Coffee yearbook 2014/15
UgandaCoffeeFederation
UgandaCoffeeFederation
16
17
W
ewish tocongratulate the
entirecoffee fraternity
upon successful completion
of coffeeyear 2014/2015 in spite
thevarious challenges thatwere
encountered. Below is the synopsisof
thecoffeemarket andoutlookduring
2014/2015.
Outlook
The global market currently looks
down from the price point of view.
Weakening economies and broadly
weakermacropicture intheconsuming
world, and those that weigh in on the
stockmarkets indicate thesituationwill
prevail for some time.
The demand for coffee especially
in the emerging markets like Korea,
Japan, andChina is stablealthough the
strength of it largely depends on the
performance of the global economy.
Themarkets are quite challenging and
Uganda`s coffee sector has to prepare
for thechallenges.
Production.
In as far as production is concerned,
2015/16 worldwide production is
set for an estimated 152m bags up
from 146m produced in 2014/15.
Uganda’s export performance is set to
be around 3.5m bags2014/15. Such
a goal will need the farmers both the
old and new to continue aspiring for
good commercial farming methods.
However, wemust remain alert to the
threat of El-Niño rains that weather
experts havepredicted inmajor coffee
producingareas.
TheElNinoPhenomenon
The year ended with the prevailing El
Nino conditions negatively affecting
theparts of EuropeandNorthAmerica
but with no significant threat to the
main coffee producing counties.
Howeverthe industry isstillsentimental
about thedryweather thatmayprevail
over some coffee producing areas
Columbia, Peru and Indonesia whose
seasons start early in the year. InBrazil,
El Nino conditions has lessened the
threat of partial drought conditions for
themain Brazil Arabica coffee districts
for the first quarter of next year, which
supports the early forecasts for a
significantly largernewBrazil cropnext
year.
InUganda, farmers expected tohave a
prolongedwetseasonand theseedling
distribution was extended in some
areas but now we are experiencing
extremely high temperatures which
puts thegovernment coffee replanting
programme at a disadvantage. While
this is going on, coffee that was
maturedmuch laterhashadgoodbean
formation and farmers are reaping
better yields.
Coffeeprices
Turning to the price, we witnessed a
major fall inprices. Arabicapriceswere
impactedmore thanRobusta as global
demand focus shifted aggressively
into the Robusta segment. Despite
Robusta`sperseverance for quite some
time itreversed laterandsharplytraded
lower. Overall price performance is
very depressing. With Arabica prices
down by 35-40% and Robusta also
down by 15-20% since last year.
However, currencies of themost coffee
producing countries depreciatedmore
than the fall in the international price.
This indeed helped to bridge the gap
thathadbeencreatedby the fall.
TheUgandashillinghassuffered froma
significant devaluation against theU.S.
dollar and in terms of local currency.
There is also a rising inflation rate that
is now in excess of 9% per annum,
which means that farm gate income
for thecoffee farmers isdecreasingand
thiscouldhaveanegative impactupon
decisions made in farm investment by
the farmers. We hope that there will
be some improvement in international
coffee prices in the short term which
is a tremendousmotivational factor to
the farmers.
Competition
Amidst this price downward trend,
the paradox of our industry can be
seen through intense competition
both locally and at a global stage.
The number of competitors keeps
growing, and despite the down trend
of the international market, local price
offeringshavekepthighaconfirmation
of free market efficiency around the
world. For Uganda being a landlocked
country there is serious need to
fix obstacles, logistics and other
impediments tobeable tocompeteon
the internationalmarket.
Consumption
Good news is that both global and
local coffee consumption is increasing
as people are now being sensitized of
the importanceof coffeeconsumption.
International
Coffee
Organization
(ICO) predicts an annual increment
of approximately 2% in global
consumption of coffee. It’s assumed
that domestic consumption is picking
up as well and soon we will have
substantial percentages domestically
consumed.
Wewish tocommendall theefforts
geared towardsproduction /
productivityand look forward to
successful2015/16.
ByMr.KailashNatan,Managing
Director,Ugacof
OVERVIEWOFTHECOFFEEYEAR2014/15
