Uganda Coffee Development Authority (UCDA) has issued guidelines that exporters will follow to acquire certificates to ship coffee to other countries.
In a Saturday statement, the Authority said that the Uganda Certificate of Origin will be issued by the Uganda Revenue Authority Uganda Chamber of Commerce and Industry.
For those exporting within the East African Community (EAC), there is an EAC-issued Certificate of Origin, which, according to UCDA, will be used for exporting coffee to Kenya, Rwanda, Tanzania and Burundi.
The COMESA Certificate of Origin will be used for the export of coffee to COMESA member states except for Kenya, Rwanda and Burundi for which the EAC Certificate of Origin must be used.
For those shipping coffee to Japan, USA, Canada, Australia, Denmark, France, Finland, Germany, Greece, Hungary, Ireland, Italy, Netherlands, Belgium, Sweden, Poland, New Zealand and all European Union states, they will use the Generalized System of Preference (GSP) Certificate of Origin.
When shipping to China, India, Morocco and South Korea, traders will use China Certificate of Origin for preferential tariff for LDCs and India Certificate of Origin for preferential tariff for LDCs, Morocco Certificate of Origin for preferential tariff for LDCs and South Korea Certificate of Origin for preferential tariff for LDCs respectively.
The development comes after the International Coffee Organisation (ICO) announced it will no longer issue its Certificate of Origin to Ugandan coffee exporters following the Uganda Coffee Development Authority’s (UCDA’s) move to temporarily leave the organization citing irregularities in the International Coffee Agreement 2007.
“The Executive Director presents his compliments and wishes to inform ICO members that, due to the decision of the Government of Uganda not to agree with the extension of the International Coffee Agreement 2007 and the consequent withdrawal of Uganda from the Organization, the Uganda Coffee Development Authority (UCDA) is no longer eligible to issue ICO Certificates of Origin,” reads as a statement issued on February 1.
“Any ICO Certificate of Origin issued by the UCDA dated after 1 February 2022 will not be valid.”
Established in 1963, the ICO brings together governments that represent 98% of world coffee production and 83% of world consumption. Uganda has been a member since its inception.
The move has pitted the Authority against a section of farmers who say they are losing out on market from countries that are part of the ICO.
“During the two years, Uganda will still issue the ICO Certificate of origin on coffee exports. All exports of coffee from member and non-members of ICO have country codes on their certificates of origin. The certificates of origin were imperative to ascertain full implementation of the quotas and after the quotas were suspended in 1989, the Certificate of Origin is voluntary; its issuance is helping in the compilation of statistics to submit to relevant government agencies and URA purposes in the collection of the Coffee Cess,” said Emannuel Iyamulemye, the UCDA managing director.
Below are Uganda's demands before re-joining the Organisation:
Promotion of Value addition: Uganda needs unconditional market access that allows for the export of value-added coffee not only green coffee. The new coffee agreement should have increased focus on value addition with protracted programs that aim at transferring values to the farm gate.
For example, a cup of coffee at the coffee shop is more valuable than 1 kg of coffee at the farm gate.
Barriers to exporting processed coffee: The importing countries impose escalating tariffs and restrictions on imports of value-added coffee. For example, Germany has a Coffee tax on value-added coffee which dates back to the 17th Century. In 2009, there was the last revision, including tax rate adjustment: For 1 kg roasted coffee € 2.19 Euros; and For 1 kg of soluble coffee € 4.78 Euros.
Under the German Coffee Tax Law, retailers established in other countries selling coffee to Germany must appoint a fiscal representative located in Germany. This requirement prevents retailers from other countries to freely import coffee into Germany and adds additional burdens that make it more difficult in particular for small or medium-sized companies to enter the German market and sell coffee at a distance.
In addition to Germany, Belgium and Denmark also charge the tax. These barriers should be negotiated and removed, in order to create even more value for the Uganda coffee sector.
There are no taxes on green beans. This encourages import of green beans which are re-exported to other countries. Uganda has repeatedly decried the lost opportunity in our export of raw coffee and thus appropriate negotiations are urgently required.
Coffee price volatility: Coffee price volatility is threatening the incomes of farmers and the sustainability of the coffee sector. There is urgent need to address and solve the structural weaknesses.
ICO Composite Indicator Price: The ICO collects prices from ‘agents’, namely: Complete Coffee Coverage in the US' in the Coverage), Germany Coffee Association, French Coffee Association and the prices from the three agents are used in the calculation of the ICO composite indicator price which is used as a benchmark for daily trading around the world.
The ICO Composite Indicator Price was created for a regulated market when the quotas were in place up to 1989. This is outdated and needs to be revised.
Classification of coffees: Uganda is the birthplace of Robusta coffee while Ethiopia is the origin of Arabica coffee. Uganda's coffee production consists of 80% Robusta and 20% Arabica. Countries producing Arabica coffee are grouped in one of the three groups established in the agreement namely Colombian mild Arabicas, Brazilian Natural Arabicas and other mild Arabicas according to the Arabica they produce.
Uganda as Arabica coffee producer is not recognized in any groups. In addition, there is only one group for Robusta coffee producers which deprives Uganda of the recognition and promotion of its distinctive quality Robusta coffee. This concern has not been addressed in the new draft Agreement, though we have raised it.
Membership votes and contributions to ICO: The draft Agreement proposes to use of a mix of 50% value and 50% volume of exports and imports for the determination of votes and contributions. Uganda's position is that contributions should be based on 100% value rather than volume since Uganda exports high volume of Robusta coffee whose value is lower than Arabica coffee of same volume.
In addition, the new coffee agreement should address re-exports. For example, in 2019 Germany imported 18.1 million 60 kg bags of green beans valued at €2.3 billion. In the same year, Germany re-exported 5.93 million 60kg bags of green beans and exported 3.93 million 60kg bags of roasted coffee beans at a value of €1.3 billion.
However, the international coffee Agreement does not consider contributions to ICO based on re-exports of green beans and exports of roasted coffee.
The increasing role of the Private Sector: Whereas the ICO is an intergovernmental organization, the private sector (multinational companies) has taken over the affairs of the organization and influence major decisions. The private sector bodies include Private Sector Consultative Board (PSCB), Coffee Public-Private Task Force (CPPTF) and CEO and Global Leaders Forum (CGLF).
The new Agreement has proposed to establish Members comprising the private sector and ICO the civil society. Uganda says this will weaken the role of governments in decisions.
Projects to address challenges in coffee-producing countries: Since Member 2012 the Common Fund for Commodities stopped giving funding to ICO States via the ICO. All countries are able to apply for loans directly.
The has not found an alternative funding institution for projects to address challenges of coffee farmers including climate change, low production 1.7 million and productivity, pests and diseases, price volatility, etc. faced by coffee farmers in Uganda whose livelihood depends on this commodity.
Increased budget for programmes: Since 2007, the UN is no longer the Depositary of International Coffee Agreement. However, the ICO staff continue to be paid UN salary scales.
This is costing members a fortune in contributions with 73 percent of the Administrative Budget allocated to personnel costs. Of the overall budget of £1,881,000, personnel costs and premises account for 80% while programme of activities cost £67,000 (3.56%).
The new International Coffee Agreement should address this imbalance and allocate more resources to programmes by creating a technical fund and split the budget into administration 40% and technical fund (60%).
In the next two years
UCDA says suspending membership for two years will give Uganda a chance to use the resources to further enhance the coffee sector and focus on the aspirations of Coffee Roadmap to increase production to 20 million bags by 2025/30.
Uganda pays an annual contribution coffee of £43,000 (Shs210 million) to the organization.
Uganda is also engaging with other African countries to develop strategies to enhance production and also start a campaign to boost domestic coffee consumption in Africa. In this regard, UCDA says the strategy is to strengthen the coffee sector regionally by advocating projects through the InterAfrican Coffee Organization (IACO).
