Kanungu coffee cooperative hit hard as Middle East conflict disrupts export trade
KANUNGU, April 1, 2026 — Bwindi Coffee Growers Cooperative Society Limited is facing a deepening crisis after nearly 10 tonnes of Robusta and Arabica coffee were stranded in transit amid the ongoing Middle East conflict, leaving exports and payments in limbo.
According to the cooperative’s Chairperson, Samuel Karibwende, the organisation had met its contractual obligations to international buyers and expected payment in February. However, communication has since broken down, casting uncertainty over its financial position.
“As things stand, we have about seven tonnes destined for Dubai and 2.5 tonnes bound for Switzerland, nearly 10 tonnes in total currently in transit,” Karibwende said. “The Dubai consignment had almost reached its destination after about six weeks in transit, while the Switzerland shipment was dispatched in mid-February and exported in early March.”
The situation has revived painful memories within Uganda’s cooperative movement. Around 2015, Banyankole Kweterana Cooperative Union [BKCU] lost coffee worth Shs 3.2 billion to an Iranian trader linked to Mehregan International Company, money that has never been recovered. The precedent has heightened fears that the current silence from buyers in Dubai and Switzerland could result in a similar loss.
The international trade disruption has triggered a severe debt crisis for the Bwindi-based cooperative.
Karibwende revealed that the Shs 250 million used to purchase coffee from farmers was obtained as a loan last year from Rubber Bank, with repayment due in February, a deadline the society has now missed.
“We do not owe the farmers anything, as they were paid using the loan from Rubber Bank,” he explained. “The responsibility now lies with us to repay the Shs 250 million, plus about Shs 20 million in interest.”
The financial strain has also jeopardised the cooperative’s statutory obligations, including its Annual General Meeting [AGM].
“Beyond the financial pressure, we are required to declare dividends to members this March,” Karibwende said. “But at this point, we are not even certain the AGM will take place because we have nothing concrete to present.”
Farmers who had anticipated a premium or post-sale bonus are also likely to miss out.
“Our buyer had promised a premium this year, and farmers were hopeful,” he noted. “But even if payment comes through now, the delays and additional costs we have incurred mean the benefit will be significantly reduced. We are already past the loan repayment schedule and expect penalties, which will ultimately affect the farmers’ earnings.”
Karibwende warned that the crisis could damage long-term partnerships and investor confidence.
“Our partners had built considerable trust in us, to the extent of advancing Shs 250 million without collateral,” he said. “They even linked us to the Beyco platform, which helps connect farmers and buyers through verified data. We had made real progress, and this setback threatens to undo that trust.”
In an attempt to demonstrate goodwill, the cooperative has made a partial repayment.
“We were expected to clear the full Shs 250 million, but for now we have managed to raise Shs 50 million, which has been paid to show our commitment,” he said. “It is painful to be in a position where farmers expect returns, yet we are unable to deliver due to circumstances beyond our control.”
Efforts are underway to resolve the impasse. Karibwende is planning meetings in Kampala with intermediaries, including the Progresso Foundation, which facilitated the loan arrangement.
“I am travelling to Kampala to engage with Progresso Foundation, who connected us to the financier,” he said. “We hope to explore possible solutions in the coming week.”
Looking ahead, primary coffee societies in Kanungu are moving to strengthen their bargaining power through collective action.
“We are in the process of establishing the Kanungu Coffee Cooperative Union to secure better markets and improve our negotiating position,” Karibwende said.
The cooperative is also seeking to build technical capacity through benchmarking visits.
“On 30 March, we plan to visit Ankole Coffee Producers Cooperative Union to learn from their experience — how they started, how they operate, and how they successfully accessed international markets,” he added.
Meanwhile, John Nuwagaba, General Manager of Ankole Coffee Producers Cooperative Union [ACPCU], said the conflict is already driving up operational costs across the sector.
“The main impact of the conflict is the rising cost of doing business,” Nuwagaba said. “Prices are not increasing due to shortages, but because of logistical challenges. Shipping through the Suez Canal has become difficult, there is a shortage of containers, and fuel prices have risen, all of which are pushing up costs.”
Karibwende has appealed for a diplomatic resolution to the conflict while urging caution among traders who rely on credit.
“We pray for a ceasefire so that we can trace and recover our money,” he said. “At the same time, those in the coffee business should be cautious about relying heavily on borrowed funds, even though it is often necessary to meet farmers’ needs and build trust with buyers.”
The ripple effects of the conflict are being felt beyond the coffee sector. During a recent Islamic festival, boutique traders in Kampala reportedly suffered losses after sending money to suppliers in Dubai, only for communication to break down amid the ongoing hostilities. It remains unclear how many other traders, cooperatives, or unions may have been affected.
Background
Bwindi Coffee Growers Cooperative Society evolved from an association established in 2016 by Dr Gladys Kalema-Zikusoka through her non-governmental organisation, Conservation Through Public Health [CTPH]. Originally aimed at providing alternative livelihoods for communities neighbouring Bwindi Impenetrable National Park, the initiative sought to reduce poaching and unsustainable farming practices. The group later registered as a fully-fledged cooperative in 2019.
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