The move led to a drop in exports for April as farmers piled their stocks in preparation for the opening of the second school term. Primary and Secondary Schools open for second term studies this month.
Statistics from Uganda Coffee Development Authority (UCDA) show that 176,561 60-kilo bags of coffee worth $26.5 m were exported in April 2011 compared to 223,099 bags worth $34 m in March 2011.
In contrast to the projection of the month, volume was down by almost 20% as farmers temporarily kept out of the market to accumulate enough reserves for school dues.
"What farmers did was to defer the sale of their coffee in April to May because they didn't have any immediate needs," says David Kiwanuka, a UCDA official.
"Nothing was forcing them to sell. In the sense of increasing prices and the fact that children where not going back in April they preferred to wait."
Kiwanuka's reasons are, however, disputable since during the first rains farmers do not harvest coffee.
Analysts say the coffee harvesting starts in May and because during April farmers had nothing to sell yet the cost of living has increased, it is not possible that farmers could hoard coffee in expectation of higher prices.
The realities in the villages are such that farmers would sell off anything to get cash quickly rather than hoard.
UCDA statistics show that the weighted average export price stood at 250 UScents per kilogramme, five cents below March 2011, while farm-gate prices averaged Shs1,900, ($.7) Shs 8,850 ($4) and Shs10,000 ($5) per kilograme for Kiboko, Arabica parchment and Organic Arabica, respectively. This is the seventh monthly report for the coffee year (Oct/Sept. 2010/11). Coffee exports in 7 months, Oct/Apr 2010/11, stood at 1.5 m bags comprising: 1.11 m bags of Robusta and 0.39 m bags of Arabica.
In the 12 months, May 2010 - April 2011, Coffee exports stood at 2.57 million bags worth US $ 313.95 m. The top 10 exporters, led by Olam (U) Ltd., accounted for 83.5% of the total exports, a slack in market concentration compared to March at 89.7% and February at 84.2%.
While there was a shift in relative positions among exporters, Kyagalanyi Coffee Ltd, Kawacom and Ugacof followed in the export rankings.
Reports show that coffee prices in the internal market remained firm, ranging between Shs 1,500 ($.7) - 2,3009$.9); Shs 3,500 ($1.4) - 4,200 ($1.9) ; and Shs 8,500 (3.9) - 9,200 ($4.6) per kilogramme for Kiboko (dry cherries), FAQ and Arabica parchment, respectively.
UCDA says the harvesting of the main season in South and South-western has begun; and the size of the crop is reported by field officers and the trade as promising especially in Masaka, Ibanda, Ntungamo, Bushenyi (Ishaka), Mitooma; and Isingiro districts.
Despite the long dry spell experienced during the year, UCDA says the size of the crop in the second half is envisioned to offset the dismal performance in Central and Eastern regions.
"The current favourable weather supported by improved agronomic practices has considerably reduced the incidence of Red blister and twig borer in coffee, restoring farmers' confidence in coffee. Farmers' demand for coffee planting materials to take advantage of the current rains has, thus gone up," the UCDA report says.
The European Union (EU) remains Uganda's main export destination. Coffee to EU countries totalled 140,416 bags, accounting for 79.5% of total exports but a drop from 151,258 bags (67.8%) recorded in March 2011.
This was followed by Sudan with 20,801 bags (11.8%) down from 51,450 bags (23.1%) in March and 35,350 bags (18.2%) in February. Coffee exports in May 2011 are envisaged to reach 210,000 bags as harvesting intensifies and farmers selling of their coffee reserves to return children to school due to open today.
Supply tightness and low stocks supported by competition will continue to underpin in the internal market.
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