Coffee crisis: Gov’t should revive CMB

By Ouma Stephern Bwire.

The government of the Republic of Uganda represented by Ministry of           Finance, Planning and Economic Development (MoFPED) and Uganda Vinci Coffee company Limited signed the controversy Coffee agreement giving the company monopoly to manage coffee processing and exports. According to the February 2022 agreement, the design, financing, construction and operation of an integrated 60,000 tonne per annum coffee processing  facility, will be based at the Kampala Industrial  and Business Park at Namanve.

The company will start  with 27,000 tonne capacity and would include the ancilliary activities and operations  necessary  for impelementation of financing ,construction, operation, coffee procurement and processing  activities  such as roasting, grinding and instant   exports processing, from green beans to roasted instant coffee..

 Vinci Coffee  is to supervise, monitor  manage and ensure  quality coffeee production for export. The company will also buy and clean green coffee beans and export  the excess green coffee beans  upon satisfaction of the installed capacity of the coffee processing facility at Kampala Industrial  and Business Park at Namanve..

 The government of Uganda agreed to give Vinci Coffee Corporate tax exemption for 10 years, exempt from value added tax (VAT) on domestic purchaser of goods and services,  exempt from stamp duty for all its transactions as per the Stamp Duty Acts.

The company is exempted from all employment related taxes and impositions such as PAYE and social security  contributions, local services tax, work permit fees or charges and exempt from from excise duty on locally produced products procured for the prupose of construction of the factory as well as exercise duty on any locally procurred financial instruments.

From the onset Uganda government seems to be reviving the defunct Coffee Marketing Board but giving roles and vesting the authority in the Vinci Coffee Company Limited.

The company is also usurping  roles of the Uganda Coffee Development Authority (UCDA), whose roles now need to be clearly defined.

Uganda established UCDA as a public authority with the mandate  to promote and oversee the coffee industry by supporting rsearch, promote production, control the quality and improve the marketing of coffee in order to optimize foreign exchange earnings for the country and ensure payments to the farmers.

Vinci Coffee is now set to determine the prices for coffee payable to farmers, a role that was played by UCDA .That means there will be duplication of roles as local coffee producers are  underpaid while processing companies are disenfranchized and thrown out of business. Why would government give an individual the monopoloy to manage coffee production, processing and exports with tax exemptions  while  claiming  to be promoting a liberalized economic policy?. The developments come two months after Uganda  announced a two – year suspension of its membership  from the International Coffee Organisation (ICO).. There is every reason to believe the pulling out from ICO was  to pave way  for the dubious but lucrative      Vinci coffee deal. Vinci could even be a decoy for  a top government official.

How will other players compete  with Vinci company favourably in the coffee industry  when it is enjoying the monopoly,  tax exemptions , outragerous electricity  and water subsidies., among other favours.

Coffee farmers, processors and exporters are crying foul and are  appealing to Uganda Parliament  to halt the deal and safe local farmers who risk being exploited and thrown out of the coffee industry..

It would be prudent for government  to revive  the defunct Coffee Marketing Board which was constituted under the Coffee Act of 1963)■

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