EU expands investment in Uganda’s coffee sector with US$654,000 processing facility

UGANDA – The European Union (EU) has intensified its investment in Uganda’s coffee sector with the commissioning of a new processing facility in Mityana district. 

The plant, managed by the Uganda Coffee Farmers Alliance (UCFA), is expected to enhance the country’s export capabilities as it navigates changing market demands and regulatory requirements in Europe.

The facility, built with a €600,000 (US$623,000) EU matching grant, serves 26 cooperatives and directly supports 15,000 farming households. 

It features a laboratory, a coffee storage unit, a cleaning, hulling, and grading facility, and a mechanical dryer, all designed to improve efficiency and quality in coffee processing. 

The initiative comes at a time when Uganda’s coffee industry is under pressure to meet the EU’s stringent deforestation regulations while maintaining its position in an increasingly competitive global market.

Europe remains Uganda’s top coffee market amid regulatory pressures

Uganda is Africa’s second-largest coffee exporter, with the EU accounting for approximately 70% of its exports, primarily to Italy and Germany. 

However, the sector faces growing scrutiny under the EU Deforestation Regulation (EUDR), which mandates strict traceability of agricultural products to ensure they are not linked to deforestation.

Tony Mugoya, CEO of UCFA, outlined the organization’s efforts to align with the new regulations. 

He stated that UCFA has developed a comprehensive farmer registration and traceability system, with the goal of having all farmers fully documented by December 2025. 

“Our system is already operational, positioning us to fully comply with the EUDR,” Mugoya said, noting that the Mityana facility, with its 50-metric-tonne daily processing capacity, strengthens Uganda’s ability to export directly to European buyers.

Despite these efforts, compliance with EU standards remains a challenge for many smallholder farmers, requiring investment in training, monitoring, and certification. 

The EU has responded by channeling additional funds into projects such as the Market Access Upgrade Programme (MARKUP) and the Cocoa and Coffee Development Project (CoCoDev), which focus on value chain improvements from production to export.

Uganda’s coffee market faces intensifying competition

While Uganda seeks to expand its footprint in Europe, it faces stiff competition from other leading coffee producers, particularly Ethiopia, which continues to dominate Africa’s coffee export market. 

Ethiopia’s strong branding of specialty coffee, backed by government initiatives, has given it an edge in premium market segments.

Beyond Africa, Vietnam, the world’s largest robusta coffee producer, has also increased its exports to the EU, leveraging large-scale mechanized farming and cost efficiency. 

With global demand for robusta coffee rising due to shifting consumer preferences and inflation-driven cost-consciousness, Uganda must contend with both regional and international competitors.

New investments and expanding trade routes

In response to these market dynamics, Uganda has sought to diversify its coffee export routes beyond Europe. 

The country has strengthened trade relations with China, where coffee consumption has surged in recent years. In 2022, Uganda signed agreements to boost coffee exports to China, tapping into a market that has grown significantly due to an expanding middle class.

Meanwhile, the Uganda Coffee Development Authority (UCDA) has continued its push for value addition, encouraging local processing and branding rather than exporting raw beans. 

The UCDA has supported initiatives for soluble coffee production and direct exports to specialty buyers, particularly in the Middle East and North America.