Uganda’s coffee exports grew strongly in March compared to a year earlier, figures from the regulator showed, but declined from the previous month due to a fall in prices.
The Uganda Coffee Development Authority said on Thursday that coffee exports rose 34.4% year on year last month to $45.9m (Shs174.5bn). The quantity exported increased to 477,561 60-kilo bags, up 37.1% from a year earlier.
The increase in exports was due to increased production following the fruition of newly planted trees and exporters drawing down their stock in the midst of the Covid-19 coronavirus lockdown, the UCDA said. However, the global pandemic has not resulted into any significant impact on Uganda’s coffee exports to various destinations, according to the authority.
Coffee export earnings were however down from the previous month despite an increase in the quantity of shipments. In February, export receipts were $46.7m on 472,994 60-kilo bags, indicating a 1.8% decline in value.
The monthly fall in the value of coffee exports reflected the lower price received in March. The average export price declined to $1.6 per kilo, down from $1.65 per kilo in February and $1.63 a year earlier.
The average price of both robusta and arabica beans reduced by $0.06 from the previous month, according to the UCDA. Robusta exports, which were 80.2% of total exports, earned $1.43 per kilo from $1.49 in February. Arabica exports fetched an average price of $2.33 per kilo, down from $2.39 a month earlier.
However, global price trends were different from those registered by Uganda. The International Coffee Organisations’ composite indicator, a weighted average of global coffee prices, reversed its two-month downward trend, rising 6.9% month on month to $1.09 — the second highest monthly average in the 2019/20 coffee year (a coffee year runs from October to September).
“Prices for all arabica group indicators increased due to concerns over the availability of that type of coffee while robusta prices fell by 0.9% to $0.67 per pound (0.45kg),” read the ICO’s coffee market report for March.
The ICO said that “concerns over disruptions to the supply chain – as March is usually a month of lower stock on-hand in countries with crop years commencing in April, particularly Brazil – pushed prices higher.”
Global coffee consumption is estimated at 169.3 million bags in 2019/20, 0.7% higher than in the previous year, with the Covid-19 coronavirus presenting a “considerable downside risk” to consumption. Still, the ICO says current estimates show that global demand will exceed production by 0.47 million bags although the situation is evolving.
Coffee consumption, particularly out-of-home consumption, may fall in response to measures taken to contain the spread of the coronavirus. Slower global economic growth and rising unemployment rates could also lead to a reduction in demand, forcing prices downwards. On the other hand, supply chain disruptions could lead to supply shortages and a short term increase in prices.
Uganda’s coffee exports in April are expected at 400,000 bags as exporters continue releasing their stocks in anticipation of lower prices when Brazil’s 2020/21 on-year crop, estimated at 60 million bags, comes to the market, according to the UCDA.
Coffee is Uganda’s second most valuable export commodity after gold. But unlike gold shipments, most of which are smuggled into the country from the Democratic Republic of Congo, the coffee is grown locally. Uganda is Africa’s largest coffee exporter, followed by Ethiopia and Côte d’Ivoire.