Uganda Coffee Supply Response and Export Demand: An Economic Analysis

Abstract

Econometric methods were used to estimate the supply and demand functions for Uganda’s coffee using time series data for the period 1971-91. Eight major importing countries for Uganda’s coffee: U.S., U.K., Japan, France, Italy, Spain, Germany, and the Netherlands were considered in export demand analysis. The models generated were able to capture over 70% of the variation in output for robusta coffee and 50% for Arabica coffee. Farmers were responsive to producer price incentives and the structural adjustment programmes instituted in Uganda had a positive impact on coffee production. Short run and long run elasticities were between 0.052 and 0.314 for robusta coffee and 0.088 and 0.526 for Arabica coffee, respectively. The demand for Uganda’s coffee is a function of a number of factors and varies from one consuming country to another. The study draws the conclusion that improved producer prices is one of the important factors in maintaining or increasing Uganda’s coffee production. This may be achieved through reduced costs and improved yields resulting from adopting of improved coffee technology.

Keywords: Coffee, export demand, supply response, Uganda