Uganda in race to meet new EU coffee export rules

150 days left to comply with new tough EU regulations on farmers who cut forests to grow coffee

Kampala, Uganda | RONALD MUSOKE | With about 150 days left before the European Union (EU) market begins implementing its tough ban on import of ‘deforestation-related products,’ Ugandan farmers, exporters, and regulators are worried.

Dr. Gerald Kyalo (PhD), the Director of Development Services at Uganda Coffee Development Authority (UCDA) told a recent meeting in Kampala that time is running out to comply with new documentation needed to be allowed to export to the EU market. Uganda’s main concern is on coffee, cocoa and their derivatives.

New required documents include detailed land-use maps to confirm deforestation-free production after December 31, 2020; compliance with local legislation in production and a due-diligence statement covering the entire coffee supply chain indicating no more than a negligible risk of non-compliance.

“If you are, for example, buying coffee from farmers in Kasese, you must have a list of those farmers and you must show their GPS coordinates which prove that in this area where you are getting the coffee from, there is no deforestation taking place,” Kyalo said. The GPS coordinates of production plots are to ensure traceability and verify deforestation-free practices.

“You must also comply with local legislation such as the National Coffee Act, 2021, and other relevant environmental laws of Uganda,” he said. Exporters must attach a due-diligence certificate.

“The due-diligence statement must contain origin details, including geolocation data for all plots, with different formats for various plot sizes (polygons for plots over 10 acres (4 hectares) or a single GPS point for smaller plots).”

Kyalo added: “If a coffee farmer in Mbale has contributed five bags of coffee in one of the containers; when the coffee reaches Europe, there will be a list indicating that there is a farmer from Mbale who contributed five bags and on that list, they will have his GPS coordinates which will be fed into a computer system so they can see his farm back home in Mbale and when that farm is linked to an earlier map, they will see whether he didn’t cut down some trees to grow his coffee.”

“But, if for some reason the check returns details to the effect that he cut down a forest between 2020 and now to plant coffee, whoever took that coffee to Europe will be fined; the importer or exporter will be fined. The coffee (consignment) will also be destroyed at the importer’s cost.”

Coffee: Uganda’s cash cow

All eyes are on coffee because it is Uganda’s principal cash crop bringing in close to US$ 1bn and about 60-75% of the country’s beverage crop is shipped to the EU member states including; Italy, Germany, Spain, Belgium, Portugal, Sweden and the Netherlands as well as other European countries such as the UK, Russia and Switzerland. This makes the EU the primary export market for Ugandan coffee.

But coffee is just one of many agricultural products on the list. Other commodities include beef, wood, cocoa, soy, palm oil, rubber, and some of their derived products such as leather, chocolate, tyres, or furniture.

Regulation (EU) 2023/1115

Exporting any of these products to the EU could get tougher soon unless the government complies with Regulation (EU) 2023/1115 which was passed by the European Parliament in 2022.

The EU’s argument is that the main driver behind the listed products is cutting down forests to expand agricultural farm land. The idea is to encourage EU citizens not to consume products that contribute to global deforestation. It is hoped this will bring down the EU’s impact on global deforestation, greenhouse gas emissions and biodiversity loss as the world moves apace towards the net-zero emissions targets by 2050.

On 5 December 2022, the European Parliament approved the new EUDR legal instrument, and on 29 June 2023, the regulation went into force, giving players in the sector up to 18 months to implement the new rules although smaller enterprises were given a longer adaptation period of 24 months. The first grace period will elapse on December 31, this year.

Big implications for Uganda

The stakeholder meeting in Kampala on July 11 was organised by the Uganda chapter of the Southern and Eastern Africa Trade Information and Negotiations Institute (SEATINI), a regional non-profit that works on trade, fiscal and development-related issues in Uganda and eastern Africa.

Nervous coffee farmers and exporters were told Uganda must have a national database for coffee farmers and whichever other products are affected by this directive.

At the moment, Uganda has no national database of coffee farmers but according to some conservative estimates, there are about two million coffee farmers around the country. The coffee farmers range from those who own pieces of land of less than half an acre to those who have recently gone commercial and have sprawls of coffee trees on hundreds of acres of land.

Kyalo said a national Value Chain Actors (VCA) register must be created as a precursor to the creation of a national traceability system aligned with the EUDR requirements. “This register will assign unique identifiers and geo-locations to all coffee farmers,” he said.

Kyalo told the meeting that the implications for Uganda are quite big. He said, already, some European buyers have signaled their intent to cease issuing forward contracts to Ugandan exporters from July 2024 unless EUDR compliance is ensured.

Varied reactions

As the deadline nears, reactions in Uganda are varied. The new directives are already proving tough for smallholder farmers who dominate the coffee growing sector.

Janet Nabukwasi, a coffee farmer from Mbale District in eastern Uganda told the meeting in Kampala that coffee farmers in her area do not even know the details contained in the National Coffee Act 2021. “How are we supposed to handle this EUDR when we don’t even know what is in the Coffee Act?” she said.

For Christine Kaaya, the Kiboga Woman MP in Parliament who also doubles as the Shadow Minister of Water and Environment, her fear is about farmers abandoning the sector if, the coffee farmer database which UCDA is about to embark upon, is misinterpreted and linked to taxation.

“It is important to explain to farmers such that they don’t link it to government taxation which might make some of them leave the coffee sector,” she said.

For some technocrats like Richard Okot, the Assistant Commissioner, External Trade, in the Ministry of Trade, Industry and Cooperatives, as Uganda works towards complying with the EUDR directive, it is equally important for the country to push its in-country value-addition agenda in the coffee sector.

“For how long are we going to rely on export of raw coffee when, we can actually earn more than what we are currently earning if we added value to just half of our current coffee export volumes?”

But, Steve Hodges from the Uganda Agribusiness Alliance, belongs to a group of realists. He told the meeting that the EU regulation is just one of many regulations that countries like Uganda will have to deal with in the near future.

“We are going to be asked to develop traceability standards for both agricultural and non-agricultural products and we need to learn to develop a mindset of record keeping and continue connecting it to traceability systems beyond coffee.”

“What we need to be thinking about now is how to develop traceability systems that are sufficiently rigorous to meet the continuously expanding requirements from the EU; we need to plan ahead in order to avoid being caught out.”

Edward Mukiibi, the president of Slow Food Uganda, a grassroots organization, is equally determined to get moving. At the meeting, he and others were upset that the government had not provided just US$10 million to embark on a rapid traceability mapping exercise in a sub-sector he called the “cash cow of the country.”

“This country is not short of resources; we just need to make our funding priorities clear,” he said. Kyalo had just told the meeting that UCDA budgeted at least US$ 4 per farmer and needed Shs35.6 billion for the traceability mapping exercise but got less than half.

Fortunately, Joyce Brenda Kisingiri, the Acting Principal Inspector at the Department of Crop Inspection and Certification in the Ministry of Agriculture, Animal Industry and Fisheries, is equally realistic.

She told the meeting that compliance to international market requirements is a challenge globally, and agriculture and trade is increasingly facing barriers which are non-tariff in nature, such as increased preferential tariffs for ‘green goods,’ incentive schemes for low carbon materials, and sanitary and phytosanitary measures.

She said, however, the government, through the Agriculture ministry’s directorates of Crop, Animal and Fisheries certification departments have considerable experience in drawing compliance mechanisms.

She said the crop certification department has set up a crop inspection and certification digital system that will trace inputs of all plant and plant products including seed, fertiliser and chemicals. This system will also house the export certification system, she said. It will handle tracing the farmer, the pack house, the transporter, the clearing agent up to the destination.

“Already the Ministry has met requirements for honey, various animal and fish products and horticulture,” she said, “We are progressively, increasingly and frequently working with the EU to make sure that we comply. We have the experience and capacity to meet those requirements and we shall support UCDA to make sure that we comply.”

Not all is lost

Kyalo told the meeting that not everything about the EUDR should be looked at in a sombre manner. He said the EUDR regulation has brought an opportunity to set up and maintain the national database for coffee and other crops.

He said the UCDA in partnership with the private sector, have since January 2023, been engaging in comprehensive awareness training sessions facilitated by the European Union Commission.

Already, a geospatial monitoring and evaluation system, alongside a Farmer Registration App, has been developed to empower coffee exporters in adhering to EUDR regulations. This innovative system, he said, is designed to capture geolocational data encompassing all production plots where coffee or related products are cultivated, including both polygonal data and comprehensive biodata of farmers.

Kyalo noted that in terms of improving market access, compliance with the EUDR could provide a competitive edge for Uganda, giving the country’s coffee producers better access to the EU market.

“In terms of sustainability incentives, the regulation may encourage more sustainable farming practices, potentially improving the long-term viability of coffee farming in Uganda. This could, for instance, include better land management and conservation practices.”

He further noted that in terms of support and investment, there may be opportunities for international support and investment to help Ugandan coffee farmers comply with EUDR. This could come in the form of technical assistance, funding, or capacity-building initiatives.

“In order to ensure continued access to the EU market, it is imperative to fast-track the registration of all Value Chain Actors (VCA) and mapping of coffee farms.” In that regard, Kyalo said, the National Coffee Act (2021) which provides for the establishment of a national register for coffee value chain actors will be relied upon to ensure a smooth exercise.

A dedicated technical working group comprising representatives from UCDA, the National Information Technology Authority-Uganda (NITA-U), the National Identification and Registration Authority (NIRA), the ministries of agriculture, trade, water and environment, and that of labour alongside other key players from the private sector, has been assembled to diligently oversee the effective implementation of the EUDR regulations.

Kyalo told the meeting that a draft coffee regulation, incorporating the EUDR requirements, has also been developed. “This is already in place; we are not going to re-invent the wheel; whoever is going to (interface with) the coffee farmers will use our system,” he said.

There are also ongoing market research initiatives aimed at seamlessly integrating the EUDR modules and traceability modules with the Geospatial monitoring and evaluation system (National Registry), ensuring comprehensive compliance and streamlined operations, he said.

“By January(2025), we should be able to link our system to that of the EU to get (download) the due-diligence certificates.”