Africa's changing tastes put coffee exports under strain

Some Parts of Africa Are Struggling to Produce

By Nicholas Bariyo

The Wall Street Journal

June 1, 2014  

KAMPALA, Uganda—At 7:30 one recent morning, Patra Akello, a dentist, joined some workmates for a ritual once rare here: a cup of coffee.

"It's my favorite daily routine," says Dr. Akello, 28 years old.

Ugandans are tea drinkers, though their country exports more coffee than any other in Africa. But times and tastes are changing, and an increasing population of Africans who drink coffee, rather than grow it, is rumbling the global market.

Dr. Akello gets her caffeine fix at a shop operated by Good African Coffee (Ltd.), a Ugandan roaster and processor. Five years ago, Good African became the first company here to market locally roasted coffee. Since then, dozens of other swanky coffee shops and restaurants have sprung up across Uganda.

Local consumption is still small, but the growing demand from local drinkers adds to an already strained market. Severe drought in Brazil has crimped supplies from the world's largest coffee producer. Demand is up among big roasters in Europe and the U.S. Coffee prices on global exchanges have rocketed.

The cost of arabica beans, sought after for their mild taste, has increased more than 80% so far this year, while the robusta grade is up about 27%, according to the ICE Futures U.S. exchange.

Buoyed by the rally, farm-gate prices for coffee in countries such as Uganda, Burundi and Tanzania have risen by an average of 30% since the start of the year. But antiquated farming practices, and neglect spurred by years of volatile coffee prices, have left many parts of Africa with lower capacity to produce. Whenever prices drop, farmers abandon plantations, even uprooting their trees, only attempting to boost output again when the market recovers.

"Every exporter is now looking for more coffee beans," says Nelson Niwahebwa, the general manager of an exporting company, Banyankole Kweterana Ltd., in Uganda's main robusta-growing region. "It's not easy to even meet contractual obligations with our existing clients."

Uganda historically produces robusta beans, but the government has been encouraging planting of the more desirable arabica variety. Arabica now accounts for 30% of production, up from around 15% to 20% three years ago.

Uganda, traditionally a nation of tea drinkers, has seen dozens of coffee shops and restaurants 

spring up as locals acquire a taste for coffee. Rising consumption is adding pressure on a region 

that already is struggling to produce. Above, Good African Coffee in Uganda. Jjumba Martin for 

The Wall Street Journal

Last year, African countries produced about 14.7 million 60-kilogram (132-pound) bags of coffee, a marginal drop from the 14.8 million bags produced the previous year, according to International Coffee Organization data. The largest producer, Ethiopia, consumed most of its coffee, exporting 2.8 million bags of a total production of 6.6 million. Uganda exported 3.58 million of the 3.8 million bags it produced.

The proportion that is exported is likely to shrink. With most countries on the continent registering a sustained average economic growth of more than 6% in the past decade, an urban workforce with a taste for coffee has been cropping up.

"It's an opportunity the private sector can harness to transform the coffee industry," says Norman Mutekanga, the business development manager at Uganda's state coffee body, Uganda Coffee Development Authority.

In Uganda, annual coffee consumption has quadrupled over the past five years, from less than 50,000 60-kilogram bags to more than 200,000 bags, according to UCDA. In Ethiopia, local consumption hit 3.1 million bags in 2013, up from 2.8 million bags in 2010.

Despite the surging demand, African farmers, who largely rely on rain and basic farming methods, aren't able to take advantage of the situation, according to the regional coffee body, East African Fine Coffees Association.

Unable to rely on the erratic income coffee produces, farmers have been switching to growing grains and cereals, which produce a crop in a single season. A coffee tree takes three to five years to mature. Angola, which accounted for an average of 5% of annual world production until the mid-1970s, lost its place among sub-Saharan Africa's leading producers after farmers abandoned the crop.

John Kyeyune has worked on his five-acre coffee farm in central Uganda since the 1990s. But with coffee trees as old as 40 years, Mr. Kyeyune says his harvests continue to drop. "I used to harvest more than 100 bags, but in recent years, I count myself lucky with 60 bags," says the 50-year old farmer.

Mr. Kyeyune's plight represents that of millions of small farmers in the region, who produce the bulk of the coffee, but are unable to rehabilitate and maintain farmlands, mainly due to lack of capital.

While the Ugandan government has been implementing a coffee-growing campaign, which includes planting new high-yielding varieties and introducing coffee farming in new regions, the initiatives are yet to trickle down to smaller landowners. As a result, the country hasn't been able to meet a target of restoring output to at least 4 million bags.

In countries such as Rwanda, Burundi and Tanzania, output has nearly halved as plantations suffer neglect.

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Write to Nicholas Bariyo at nicholas.bariyo@wsj.com