KAMPALA-Legislators of Parliament of Uganda will this Thursday discuss important matters in agriculture particularly, coffee and tobacco sub-sectors, according to Tuesday’s Order Paper that contains a motion on each of the sectors.
The focus will mainly be on a motion for a resolution of parliament urging government to reconsider its decision not to join the extension of the International Coffee Agreement [ICA], 2007.
The mover of the motion will be the Workers’ MP Abdulhu Byakatonda. He will be seconded by colleagues; Miriam Mukhaye [Mbale District Woman MP], Jenife Nalukwago Ayoo [Kalaki District Woman MP], Linda Irene [Fort Portal City Woman MP] and Melsa vako Naima Gule, [Yumbe District Woman MP].
The motion comes at the time when many coffee dealers in the country have castigated the government for withdrawing from the ICA, which effectively ended Uganda’s participation in the International Coffee Organisation [ICO] from February 2, 2022.
The Uganda Coffee Development Authority (UCDA) issued a public statement outlining seven reasons for leaving the international agreement, including unfair tariffs, restrictions on exporting processed coffee and an “unjust and outdated” coffee classification system.
However, analysts say unbalanced tariffs are an ongoing concern in the global coffee market, with a 2020 ICO report finding processed coffee imported to Uganda is subject to a 60 percent tariff while other countries, including European Union, Norway and Japan, pay low or zero rates.
However, the ICO says tariffs are under the jurisdiction of the World Trade Organisation, and argues its regular reports on obstacles to consumption are a valuable tool for countries negotiating better terms within free trade agreements.
The statement says other specific Ugandan concerns, including barriers to exporting “value-added” processed products, are currently under review by a working group established in 2019 to update and reform the current Agreement.
“Ugandan representatives have not been actively participating in this process and have never submitted any proposal for change based on their vision and interest, nor on the issues raised in the UCDA statement of 9 February,” the ICO says in a statement.
The extension of the ICA 2007 has been approved by all ICO members except Uganda. “As of February 2, 2022, the exporting members of the ICO still represent 93 percent of world coffee production and 64% of consumption,” said in a statement of February 2, 2022..
Since receiving the notification from the UCDA in September 2021, ICO and International Coffee Council (ICC) say have made several attempts to engage with Ugandan authorities, including President Museveni, without any response or receiving the reason for the decision of the UCDA.
The ICO says its doors will always be open if and when Uganda decides to rejoin the ICA.
Local coffee stakeholders are wondering where Uganda will get new allies with the exit from ICA and ICO.
“Why did Uganda withdraw from ICO? What are the benefits and disadvantages of Ugandan withdrawal? What is a replacement to ICO membership? Who are our new allies? What is our new strategy?” These are the questions asked by Mathias Nabutele, CEO of Mobile Coffee Uganda in his Open Letter to President Museveni on April 29, 2022.
Meanwhile, the motion also comes after the Minister of Finance Matia Kasaija and his Permanent Secretary, Ramathan Ggoobi signed the controversial coffee agreement with Enrica Pinetti, the Uganda Vinci Coffee Company [VACC] on February 10, 2022.
Under the agreement, the government gave Uganda Vinci Coffee Company Limited free land in the Industrial and Business Park at Namanve measuring 27 acres after indicating its capability to establish a coffee processing facility in Kampala.
The agreement also gives the company exclusive rights to buy all of Uganda’s coffee and its concession will end in 2032 but is subject to renewal. The agreement also exempts the Vinci Coffee Company from paying Income tax, Pay As You Earn, Excise duty, and remitting NSSF contributions. The document also provides a 5 percent subsidy on electricity for the company.
However, a number of people involved in the coffee business including farmers, exporters, processors and opposition legislators have contested the agreement and described it as a bad deal.
President Museveni and Attorney General Kiryowa Kiwanuka still think the agreement is fine as it would add value to Uganda’s coffee but also provide jobs, even though he said days ago that some parts of the agreement would be reviewed.
Uganda is growing its coffee industry with new laws tightening regulations for growers and producers, and government programs distributing millions of new coffee seedlings to farmers.
In the last financial year, Uganda saw record growth in coffee exports, earning a reported US$629.8 million. Globally, coffee is said to be the second traded commodity after oil.
In the next five years, the government wants to see coffee exports reaching 20 million bags.
Uganda is the eighth largest coffee producer in the world but government’s desire is to get to the second or third position. The country which grows both Arabica and Robusta coffee types is Africa’s top exporter, even though Ethiopia which consumes most of its coffee domestically, is Africa’s top producer.
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