A surprising study by the International Institute of Tropical Agriculture (IITA) has found that middlemen are playing an important part in the Ugandan coffee value chain.
But in many countries in Africa, middlemen are often perceived as the “bad guys” out to exploit and defraud farmers.
The IITA study, however, recommends the exploration of opportunities to include middlemen as active contributors in building a strong Ugandan coffee value chain.
In Uganda, coffee farmers can choose between formal markets, which are producer organizations like cooperatives or farmer groups, or informal markets, which include independent intermediaries, commonly known as middlemen.
If a farmer is a member of a producer organization, selling to middlemen is seen as “side-selling”, a behaviour perceived to threaten the economic viability of the producer organization.
To understand the role of side-selling and middlemen in Uganda’s coffee sector, IITA undertook a study to analyse the socio-economic and institutional factors driving farmers’ choice of marketing channels.
The study was conducted in five districts of Buikwe, Luuka, Masaka, Mityana, and Mubende through participatory household and stakeholder surveys, interviews, and a validation workshop in 2019. Results are based on the 2017/2018 season.
The study found that 55% of farmers sold their coffee to intermediaries for various reasons including, the middlemen offer to buy at farm gate which reduces transport costs for the farmer; middlemen usually do not have high demands on coffee quality as opposed to producer organisations; and they offer instant cash payments and often buy different coffee forms, such as red cherries which is an attractive option for poor farmers who cannot or do not want to invest time and money in processing.
The findings of the study were shared at a forum that brought together members of the National Coffee Platform—a public-private sector platform that brings together key government and private sector stakeholders to dialogue and share lessons on strengthening Uganda’s sustainable coffee production.
The forum participants agreed that middlemen have diverse marketing niches allowing them to buy all forms of coffee at different prices. Middlemen also have more access to market information, and in some cases, were found to give farmers better prices.
Their services can also complement what producers offer farmers, and their ability to buy larger quantities makes them the major suppliers to private companies.
The findings and policy recommendations from the study have been summarized in a policy brief: IITA, 2019. Middlemen: Threat or opportunity for the Ugandan coffee value chain? The policy brief, Kampala, Uganda.
The findings will support efforts by the government and all other actors in the National Coffee public-private partnership (PPP) Platform in making evidence-based decisions and policies to develop Uganda’s coffee sector.
The study was funded by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH (German Development Agency ).
It was conducted by Theresa Liebig, an IITA consultant and Juliana Ewert, an MSc student from Georg-August-Universität supported by the IITA-CSA Coffee programme in Uganda.