Masaka Sustainable Coffee Scheme
Bringing fine Ugandan Robusta coffee to international specialty markets
Overview
The Masaka Sustainable Coffee Scheme (‘Masaka Scheme’) in western Uganda aims to support smallholder coffee farmers to sustainably improve coffee productivity to produce fine Robusta coffee for purchase and export to international specialty coffee markets. The scheme was set up in 2017 by Kyagalanyi Coffee Ltd, a wholly-owned subsidiary of Volcafe, and has grown successfully since the start.
However, the disruption from the COVID-19 pandemic on specialty coffee markets due to reduced consumer demand is threatening the expansion of nature-based business models, such as the Masaka Scheme, that deliver premium products, enhanced incomes to producers and environmental benefits.
The Rebuild Facility will mitigate these negative impacts by providing a returnable grant to support the purchase and export of coffee produced by smallholder farmers from the Masaka Scheme. This financing will help ensure the continued development and expansion of the program, safeguard commodity dependent communities and continue to provide an example of sustainable coffee production that can inspire replication.
Kyagalanyi Coffee Ltd. and Volcafe
Kyagalanyi is a 100% owned subsidiary of Volcafe, the coffee division of the international commodity trader, ED&F Man . Established in 1992, Kyagalanyi is the oldest and largest coffee exporter in the country, exporting 770,000 bags of coffee in 2019/20, or approximately 18% of Uganda’s coffee exports . It has built four certified value chains, including the Masaka Scheme, and supports over 25,000 farmers. All value chains are Rainforest Alliance (RA) certified and the areas work with specific roaster standards.
The Rise of Ugandan Fine Robusta
Coffee is central to the Ugandan landscape and economy, contributing to 1 5% of all goods exports and supporting over 1.7 million households . Uganda is also considered the birthplace of Robusta and wild varieties of coffee can be found growing in the country's natural forests. Continued deforestation not only threatens future production of the coffee, but also the biodiversity benefits associated with the Uganda variety of Robusta.
Robusta accounts for 80% of Uganda's coffee trade , the remaining being made up by its more renowned counterpart, Arabica coffee. This is predominantly due to Arabica's enhanced complexity around flavor and aroma, and the corresponding higher prices. For these reasons, the specialty market has at times disregarded Robusta. However, attitudes are starting to change and this was epitomized by the release of the Fine Robusta Standards and Protocols by the Coffee Quality Institute in 2019.
Companies such as Kyagalanyi are at the forefront of bringing high quality fine Robusta to market through providing farmers with improved processing and production techniques. Smallholder farmers in the Masaka Scheme grow their coffee in the Greater Masaka region, an area that covers 58,000 hectares and is located on the central plateau of Uganda. This region is one of the key Robusta producing areas in the country, accounting for 20-25% of total Ugandan Robusta production (Kyagalanyi).
Robusta harvest in the Greater Masaka region
Overcoming the impacts of COVID-19 uncertainty
63% of Uganda coffee is exported to Europe and, despite an overall increase in exports in 2020, the lockdowns that took place across Europe led to uncertainty in the coffee markets. In the case of Kyagalanyi, the drop in out of home consumption in Italy and Spain saw a lower demand for the larger Robusta coffee beans that are often sourced by cafes and restaurants. The knock-on effect was an emerging lack of confidence in the market which meant prices for Robusta fluctuated significantly, pushing the lowest price per kilogram even lower. The Rebuild Facility's returnable grant will provide Kyagalanyi with additional security going into the 2021 harvest season.
Smallholder farmers from the Masaka Scheme also felt the impact of the global disruption caused by COVID-19. The infographic below gives an overview of how COVID-19 impacted the specialty coffee supply chain. In Uganda, a second lockdown was enforced in June 2021, further limiting the ability of smallholder farmers to sell their coffee.
Impact of COVID 19 on the specialty coffee supply chain (Information sourced from Bloomberg/Reuters/CBI)
How is the Rebuild Facility supporting the rise of fine Robusta?
Kyagalanyi is a key player in the Uganda coffee sector and the Rebuild Facility is working with the company to increase its share of responsibly sourced coffee. Kyagalanyi is scaling up the Masaka Scheme in 2021 to meet increasing demand for responsibly sourced fine Robusta coffee.
The returnable grant will firstly, secure the transition towards more responsible and regenerative practices within the Masaka Scheme, and secondly, will help bring job security to smallholder farmers producing fine Robusta by securing sources of income and facilitating Kyagalanyi to honor offtake agreements with smallholder farmers.
Below is an overview of the environmental and livelihoods impact opportunities identified through working with Kyagalanyi and Volcafe.
Environmental Impact
Environmental impact will be delivered through supporting regenerative production processes that protect, conserve and restore the carbon and biodiversity contained within the Masaka coffee growing landscape. The Rebuild Facility will support the regeneration of smallholders' farmland. As the Masaka Scheme scales-up, an increased area will be under improved sustainable land use management.
The Masaka region has relatively low above ground biomass density compared to other areas of Uganda due to ongoing deforestation. Since 2011, the Masaka region has lost over 1,000 hectares of tree cover per year, resulting in approximately 230,000 tonnes of annual carbon emissions . The Rebuild Facility has identified deforestation-free specialty coffee production as a key pathway to regenerating this landscape.
The returnable grant will be utilized to purchase coffee from the Masaka Scheme which, with the support of Kyagalanyi, are planning to commence a five-year program to increase adoption of agroforestry practices among smallholder farmers. By 2025, Kyagalanyi aims to have integrated agroforestry systems into 70% of its farms in the region. By supporting this method of production, the Rebuild Facility is able to secure and maintain incomes for smallholder farmers that are associated with regenerative coffee production.
The Masaka Scheme smallholders also receive training from agronomists on biodiversity preservation and the co-benefits of avoided deforestation and reforestation. They are shown how to bring additional value to the landscape through improving ecosystem services whilst also increasing their yields. The map below demonstrates how the Masaka Scheme farmers, illustrated by the orange circles, are operating in districts that historically have recorded high deforestation rates. The returnable grant will support Kyagalanyi's nature-based value chains and ensure smallholder farmers are committed to forest protection, acting as role models for other smallholders on how to increase production yields and incomes whilst regenerating the landscape.
Swipe to discover tree cover change in Uganda between 2000 & 2020: Left displays tree canopy in 2000 and the right side highlights historical deforestation (red color palette) and 2020 tree canopy cover (Source: Hansen/UMD/Google/USGS/NASA.)
Livelihoods Impact
The Rebuild Facility will aim to impact the livelihoods of smallholder farmers and temporary workers by maintaining incomes and inputs for sustainable coffee production. Kyagalanyi provides smallholder farmers in the Masaka Scheme with a range of inputs to improve their coffee production and livelihoods. These include operational services such as processing, transport and agronomy training, as well as educational programs on gender equality and youth development. The returnable grant will directly support this type of business model that promotes community development alongside high-quality, higher yielding sustainable coffee production.
In 2020, Kyagalanyi supported smallholder farmers to obtain Rainforest Alliance certifications
In return for a price premium paid on their Robusta coffee, farmers must comply with the responsible agricultural practices outlined by the standard.
On a yearly basis, farmers are scored across four pillars of sustainable agriculture:
- Management - Farms being economically viable and resilient and farmers must carry out efficient mapping and record keeping practices to comply.
- Farming practices - Farmers must implement integrated pest management techniques and maintain or improve soil quality of their farms. Guidelines on pruning and planting are readily available to farmers.
- Working conditions - Use of forced labor and child labor is forbidden and farmers must guarantee healthy and safe working conditions for workers. This covers everything from wearing PPE whilst handling pesticides to guidelines on children involved in family farming.
- Environment - Farmers are required to protect biodiversity, natural resources and reduce their greenhouse gas emissions. Strict measures are put in place to ensure zero-deforestation and develop practices such as creating buffer zones of native vegetation along the borders of seasonal and permanent water bodies.
Additionally, all smallholder farmers from the Masaka Scheme receive a premium above the average local market price for Robusta coffee, which includes a premium for RA certification compliance and Kyagalanyi's inbuilt premium for responsibly sourced coffee. For smallholder farmers, who are mostly reliant on subsistence agriculture, this additional revenue is significant and can cover half a year’s primary school fees in Uganda.
The project takes places between March 2021 and December 2021. Once all of the robusta coffee has been purchased, processed, exported and sold, the returnable grant is then passed back to the Rebuild Facility to be reallocated to other coffee and cocoa value chains.
For more information relating to this project please contact sam.stewart@systemiq.earth
