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Coffee output in Africa's big two growers to crawl to all-time high

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June 7th, 2017

Combined coffee production in Africa's big two growers will crawl to an all-time high next season, supporting record exports too, as output in Uganda at last surpasses the peak set 20 years ago.

Total coffee output in Ethiopia and Uganda, which between them account for more than 60% of Africa's production, will touch 10.9m bags in 2017-18, US Department of Agriculture foreign staff said in their first estimate for the season.

That would represent an increase of 175m bags year on this season's record top from the two countries – the only African nations in the world top 10 - and support exports of 7.31m bags, also setting, just, an all-time high.

But it is Uganda, rather than Ethiopia, which will see the greatest output rise, despite the attempts by Addis Ababa to foster rapid production gains.

The Ethiopian government is attempting, under its Growth Plan II initiative unveiled last year, to more than double coffee output over the five years to 2019-20 to some 1.0m tonnes (16.7m bags).

Coffee Futures: 'Relatively stagnant'

However, US officials in Addis Ababa noted in a report that Ethiopia's coffee output had been "relatively stagnant", standing at 6.52m bags in 2016-17, up only 20m bags over five season.

"In order to boost coffee yields, greater investment and resources need to be devoted to developing and distributing improved varieties, extension support, better inputs such as fertilizer and irrigation, and improved tree management practices," the briefing said.

However, even if Ethiopia managed to "double productivity to match Brazilian yields", its output would, at some 800,000 tonnes, fall short of the 2017-18 without extra plantings – which take some years to mature and produce cherries.

Although the country is implementing reforms including restablishing an official coffee and tea development and marketing board, the CTDMA, and is liberalising exports to allow them to bypass the Ethiopian Commodities Exchange (ECX), the impact of this shake-up "remains to be seen".

Coffee Futures: Export fillip

The export rejig will allow Ethiopia to sell so-called "identity preserved" coffee, which has not been possible when beans have to pass through the ECX, limiting the country's access to higher-quality markets.

"Identity preserved coffee exports are expected to translate into more value-added coffee being sold abroad since international buyers are willing to pay a premium for the identity preserved marketing claim," the briefing said.

Nonetheless, Ethiopian coffee exports were forecast rising, in volume terms, by only 10,000 bags in 2017-18, starting in October, to 3.31m bags, constrained by the output prospects and gradually increasing domestic consumption.

Coffee Futures: Ugandan record

Ugandan production, meanwhile, was forecast rising by 150m bags to 4.35m bags, surpassing a record that has stood since 1996-97, with US officials crediting success in the country's own campaign to replant with more productive trees over the past five years.

The drive has been "aimed at increasing yields through adoption of improved varieties by farmers, increasing the efficiency of farm inputs supply, and the revamping of agricultural extension services".

Indeed, since 2011-12, Ugandan output has soared by 37%, reflecting growth in particular in output of arabica coffee, which has been favoured by the reseedings effort.

'Political interference and mismanagement'

The recovery has been even more stark from a Ugandan production low of 2.18m tonnes in 2005-06, blamed in part on continued shockwaves from the 1989 liberalisation of the coffee market which left landlocked Uganda struggling to compete on export markets.

The International Coffee Organization has also flagged the failure of coffee groups, such as grower co-operatives, formed after the shake-up.

"As was the case in Uganda and in many other producing countries, the earlier success of these co-operatives was undermined by political interference and mismanagement."

Furthermore, Uganda's recovery has also been fuelled by some consolidation of a coffee production sector had been help back by a knock-on effect of the fact that robusta trees are indigenous to the country, and the Great Lakes region, allowing reliance on relatively poorly-yielding historic stock.

A USDA report in 2010 noted that "reportedly, small-holder robusta coffee farmers, who may only have a few trees on their farms, produce 99% of the Ugandan exportable coffee surplus.

Such growers were "held hostage by nature, tradition, lack of education, limited market opportunities and the price effects of very high freight rates to get the coffee to a port of export".

 - Mike Verdin at Agrimoney.

See Also: Coffee, Cocoa, Cotton, Orange Juice, Sugar