The ongoing dispute between parts of the government and a group of MP and lawyers over the award of a coffee contract to Italian investor UVCC is expected to reach a showdown in court on 15 December this year, where the judge will assess the way the contract was structured and determine whether it was legal. Each party must submit its written submissions by 31 October 2022.
It is disappointing that the government’s focus is on legality rather than proving that it is good for the industry. With both sides claiming that they are acting in the best interests of coffee producers and local businesses that support coffee farming, one would hope there would be more discussion on this issue.
The absence of such debate, and instead the reliance on a legal process having been properly followed, could be interpreted as a weakness on the part of the side promoting the deal. If the deal is good, why is it so hard to convince the rest of the industry?
The Ugandan authorities’ arguments so far have ranged from accusing the International Coffee Organisation (ICO) of creating barriers to the export of processed coffee to colonialism and protectionism within Western consumer countries.
But how the deal with UVCC will solve this problem has not been convincingly explained. Any processed coffee exported by the company is still subject to the same rules that Uganda claims hinder it.
However, when reading the Act, we noticed that several requried elements were missing in this deal, including a published feasibility study.
In addition, the country has granted generous incentives to the company, some of which included an immediate cash payment from the government, without any commitment from the investors to date.
These incentives were granted under a law designed to attract investment from abroad. However, when reading the Act, we noticed that several required elements were missing in this deal, including a published feasibility study.
I suspect that this is because the business may not be feasible while benefiting producers.
The Uganda Coffee Development Authority (UCDA) has also expressed support for the agreement, citing the small share that Ugandan producers receive of the total value in the supply chain. The Permanent Secretary in the Ministry of Finance, Ramathan Ggoobi, has gone on record saying that Uganda could get nine times more value from its production if it did the processing itself.
This figure is misleading, firstly because it assumes that all coffee is sold as processed, which is not the case. Speciality coffee needs to be roasted close to where it is consumed because consumers like to have a relationship with local roasters and do not pay a premium for coffee with old roasting dates.
For non-speciality coffee, higher revenues come with an increase in costs, and it is not a given that a profit will be made in this highly competitive business.
Ggoobi knows this perfectly well, and these are empty statements meant to please the public. The government has already contradicted itself when it stated as part of its defence that the UVCC business would only account for 60,000 tonnes of the total production of 400,000 tonnes.
So when it suits the government, it uses 100% of production to illustrate how much value is on the table, while on the other hand, it uses a figure of only 15% of production to defend its decision when awarding this contract.
I am not sure who is convinced by the government’s arguments, but according to a petition already signed by more than 30,000 people against the agreement, it is not as many as the government might like.
photo source: Alvinategyeka, CC BY-SA 4.0 https://creativecommons.org/licenses/by-sa/4.0, via Wikimedia Commons
