Alternative Growth Strategies for Uganda Cotton and Coffee

Sam BeninRhona WalusimbiLiang YouSimon BolwigJordan Chamberlain

IFPRI

BackgroundPurpose:• To support the IFPRI/USAID ongoing research program to identify

and monitor sustainable rural livelihoods and land uses in Uganda

Specific Objectives:• Review trends in

- Production ,Consumption/Trade/Value Addition

- Human Welfare, Ecosystem Welfare

-Constraints, Opportunities and Development Initiatives• Asses welfare impacts of alternative growth strategies

Methodology:• Literature review• Discussions with relevant institutions and stakeholders• Simulation of welfare impacts of alternative strategies using DREAM

model

Cotton Production Trends• Cotton introduced in Uganda in 1903• Peak production in 1970. Large negative growth rates in 1970s and

early 80s, recovery thereafter

Source: FAOSTAT (2002)

-30

-20

-10

0

10

20

perc

en

tAnnual growth rates of Uganda Cotton

Production 4.58 -27.62 1.37 9.98

Area 1.66 -15.53 -2.58 16.40

Yield 2.87 -14.31 4.05 -5.57

1961-71 1971-81 1981-94 1994-2000

Cotton Export Trends• Large negative growth rates in 1970s and early 80s, recovery thereafter

• Export value growth rates lagging behind below volume growth rates

-40

-30

-20

-10

0

10

20

perc

ent

Annual growth rates of Cotton Lint Exports

Export Quantitiy 3.22 -33.92 5.86 11.10

Export Value 2.42 -26.25 0.78 9.68

1961-71 1971-81 1981-94 1994-2000

FAOSTAT DATA (2002)

Cotton Export trends cont’d

Value of apparel and clothing accessories exports

0

50

100

150

200

250

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Year

'000

US

$

Source: UBOS Statistical Abstracts

Farm-Level Cotton Profitability Trends

Source: APSEC,

cotton net profit-national average

-20,000

-15,000

-10,000

-5,000

0

5,000

10,000

15,000

1993/4 1996/7 1998/9 2000/01

US

hs/H

a

Yield (kg/ha) -national average

580

600

620

640

660

680

700

720

1993/4 1996/7 1998/9 2000/01

year

kg/h

a

Total Costs - national average

0

50

100

150

200

250

1993/4 1996/7 1998/9 2000/01

Thousand

US

hs/

Ha

Producer price (Shs/kg) - national average

285290295300305310315320325330335

1993/4 1996/7 1998/9 2000/01

Farm- Level Cotton Profitability cont’d• Location and technology affects profits

Cotton net profit by technology and region, 2001

(80,000)

(60,000)

(40,000)

(20,000)

-

20,000

40,000

60,000

80,000

handhoew ithout spray

handhoe w ithspray

ox ploughw ith spray

tractor w ithspray

US

hs/H

a

northern eastern central w estern

cotton net profit by technology

(20,000)

-

20,000

40,000

60,000

80,000

100,000

120,000

US

hs/h

a

Source APSEC-various

Source:NAADS,2003

Cotton’s Contribution to Household Incomes

• In past and presently, cotton considered important for poverty alleviation in Uganda

Trends• In the 1960’s cotton at least partially the source of income

for over 60% of Uganda population (Serunjogi et al 2000). 700,000-800,000 farmers.

• In 2000, contributed to incomes of approx. 10 % of Uganda population (COMPETE, 2002). 400,000 farmers.

• In their analysis of cotton development domains in cotton growing areas (You and Chamberlin, 2002) report that

cotton contributes modestly to total income modest (2%-13%) and its contribution to total value of production is 2%

Cotton Development StrategiesKey Issues:

• Current production below potential,

• Good opportunities- favorable soils and climate, high grade cotton, good regional and international markets

GOU Strategy: Strengthen Vertical Integration of the sector to serve domestic and international markets through increased profitable cotton production and development of apparel production (CARANA, 2000)

Cotton Development Strategies cont’d• Suggested actions by GOU, private sector include:

Increase production of cotton lint through :

Increase production of yarn and textile products through:

-Increased farmers’ access to extension and training

-Improved cotton research- private sector participation, funding

-Increased foreign investment to increase production (area??)

-Increased farmers access to production credit

-Improved roads , railways -Enhanced cotton quality Improve market information services

-Improved labor productivity-Renovated or expanded textile

and garment factories-Increased access to credit-Improved market information

services

Coffee Export Trends• Coffee has been Uganda’s most important cash crop since the late 1960s.

Peak exports in 1995/96• Deep decline since 1995 due to collapse of world prices and associated

decline in production. Has coincided with spread of coffee wilt disease• In 2002 coffees share to total exports at historical low – 20.7%

Coffee Export Volume, Value, 1964-2003

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

64/6

5

65/6

6

66/6

7

67/6

8

68/6

9

69/7

0

70/7

1

71/7

2

72/7

3

73/7

4

74/7

5

75/7

6

76/7

7

77/7

8

78/7

9

79/8

0

80/8

1

81/8

2

82/8

3

83/8

4

84/8

5

85/8

6

86/8

7

87/8

8

88/8

9

89/9

0

90/9

1

91/9

2

92/9

3

93/9

4

94/9

5

95/9

6

96/9

7

97/9

8

98/9

9

99/0

0

00/0

1

"01/0

2

02/0

3*

Th

ou

san

ds

year

0

100

200

300

400

500

600

Mil

lio

ns

QUANTITY (60 Kg Bags) VALUE US $

(Source: UCDA)

Coffee’s contribution to Incomes

• It contributes to incomes of approx 2 million people (500,000 households) CARANA, 2003

• Coffee central to poverty reduction in Uganda

• It is grown by an equal share of poor and less- poor households (DAE, MUK)

Coffee Development Strategies• CARANA 2003 reports on coffee

competitiveness Strategies agreed upon by GOU, industry and donors in 2002 . They focus on research, farm level production, processing and value addition, infrastructure, markets and regulation and policy

Coffee Development Strategies cont’dAction points under Production Strategies included:

• Replacing wilt affected plants with resistant genotypes

• Improving coffee plant multiplication

• Expanding Arabica area planted

• Supporting development of shade grown coffee

• Strengthening farmer associations

Action points under Processing and Value Addition Strategies included:

• Assisting firms in exploiting value added processing opportunities

• Supporting expansion of centralized wet milling facilities

• Monitoring and reducing Mycotoxin levels

• Increasing availability of credit to small and micro enterprises