THE EFFECTS OF GLOBALISATION ON TRADE – A SPECIAL

FOCUS ON RURAL FARMERS IN UGANDA

by Edward Mubiru, World Vision International, East Africa Regional Office
Report revised November 2003

Introduction
Interest in globalisation is world wide, although globalisation is often viewed only in the
context of economics. In its broadest sense globalisation affects crosscutting lifetime
choices of people everywhere. It includes democracy, human rights, and international
commitments to reduce poverty and induce economic progress in many developing
countries of the world. Just as there are large numbers of proponents of globalisation,
there are hundreds of thousands of critics of as well across the globe. Globalisation is
indeed a force to reckon with. This conclusion was clearly stated at the Communiqué of
the Lyon Summit of the G7 in June 1996:
“ In an increasingly interdependent world, we must all recognize that we have an interest in
spreading the benefits of economic growth as widely as possible and in diminishing the risk
either of excluding individuals or groups in our own economies or excluding countries or regions
from the benefits of globalisation.”

This paper outlines the major historical developments of globalisation and specifically
describes the effects of globalisation on coffee, the most important item in Uganda’s
international trade. In particular, this report attempts to analyse the impact of
liberalization on the production, marketing (supply), demand as well as prices and
revenues from coffee in Uganda. Central to this report is the impact of globalisation on
the lives of needy rural farmers whose main source of income is coffee. This paper also
points to some elements of the biblical basis for needed action.

Key definitions. Globalisation has been defined in various ways, but there is no
standard definition. It may be best to describe globalisation by its characteristics such as
those found in the UN Secretary General’s report on globalisation1:

“What is globalisation?
The Secretary-General’s preliminary report on globalisation (A/55/342) sets out a framework
definition of globalisation. It assumed that globalisation is multi-dimensional and that it can be
broken down into numerous complex and interrelated processes that have dynamism of their
own, resulting in both varied and often unpredictable effects.
The preliminary report notes that, while there have been previous eras that have experienced
globalisation; the present era has certain distinctive features. These include, although they are

1
See the United Nations Secretary General’s definition as contained in “ Globalisation and the Human
Rights Framework (A/55/342): A panel discussion during the PrepCom of the Conference on Financing for
Development”, United Nations, 18 October 2001.

1
 not limited to:
§ trade liberalisation;
§ increasing and changing patterns of financial flows;
§ cheaper and quicker transport;
§ the growth in the size and power of corporations; and,
§ impressive advances in new technology, in particular information and
communications technology.
Generally, these processes are evolving, partly through their own dynamism and partly through
the implementation of international, regional and national rules, standards and policies - in
particular, the rules of the WTO, and the policies of the IMF and the World Bank"

Key Assumptions. In its ideal form the promotion of globalisation was initially based on
the economic principle of comparative advantage (CA) and a free movements of goods
between borders in a market that is free from governmental involvement. CA assumes
that as countries concentrate on producing the kinds of goods and services in which
they have a relative advantage over other states, the total effect will be an increased
volume of trade from which all trading partners benefit. This gain or advantage would
result in more consumption and economic growth because the economy will be doing
what is most efficient. Additional results include more employment opportunities,
improved household incomes and ultimately a better quality of life. The other major
assumption of globalisation is borderless marketing arrangements that will facilitate freedom
of movement of investment resources as well as goods and services based on the forces of
demand and supply. In reality, globalisation is propelled by far more complex forces such
as friction in the movements of goods and time lag from the time of policy
implementation and the effect on the market and numerous other conditionalities in
addition to the theory of comparative advantage. Most observers would say that what
happens under globalisation is the product of very complex economic, political and
social considerations.

Yet, there is a spiritual dimension of globalisation, too. In various parts of scripture, it is

apparent that genuine prosperity is closely linked to personal and corporate love for
God as evidenced by love for one’s neighbour, justice, righteous living and concern for
the poor. In Deuteronomy, 28: 1-67 and 29:11-16, the prosperity of Israel was to be
inextricably linked to obedience to God’s commandments of love and righteous living.
The very survival of the nation of Israel was subject to obedience to God and his ways
of justice. (1 Kings 9: 2-9 and II Chronicles 7: 12-22). This raises important ethical issues
and spiritual dimensions about globalisation, specifically, and human well being in general.
How is the pursuit for profit aligned with love for God and for neighbour? How does
globalisation impact the poor? How is justice protected or affected by globalisation and
the free market? How wholesome are the benefits of globalisation as seen through the
lenses of scripture? Above all, what responsibilities do Christians have in the face of
globalisation?

2
Overview of the effects of globalisation on world trade
From an economic perspective, the primary engine that is driving the complex effects of
globalisation on trade is liberalisation. Globalisation emphasises that trading among
member countries should open up their markets and that trade in goods and services
should be “borderless.” According to Killick (2000)2, a significant part of the world and a
large numbers of countries are now effectively participating in the processes of
integration and globalisation. In this regard globalisation may be thought of as the
integration of economies through trade, capital flows and information technology.

A key assumptions underlying the trade liberalisation drive is that once markets are free
from trade restrictions, factors of production will be directed by the unrestricted forces
of demand and supply, leading to efficient investment by producers. Other assumptions
include the free movements of factors of productions such as capital and labour and that
there are instantaneous adjustments. That is, labour would move from one sector into
another with smooth transition and that goods move from one market to another
without friction. It is also argued that the ultimate result will be an increase in total
output for all trading partners, based on the principle of comparative advantage. These
economic gains are shown in Table 1.

Table 1: Foreign Exchange Markets (in billions of US dollars and

percentages)

Foreign exchange Markets 1986 1989 1992 1995 1998

Estimated daily global turnover, of which
percentage trade in: 188 590 820 1,190 1,500
Total world exports (goods and services) 7.4 15.8 17.4 19.1 22.8
Total global reserves (minus gold) 36.7 75.9 86.0 84.3 -
Source: IMF, World Economic Outlook, 1997, 2001

The rapid growth of Foreign Direct Investment (FDI) has also been an important
element of economic integration. Overall world trade has grown two or three times
faster than global GNP (gross national product) in the last decade. Sadly enough,
however, Africa has consistently fallen behind in this trade growth to the extent that
today Africa’s total exports hardly makes two percent of total world exports. This is
apparently due to the relatively slow pace at which Africa has opened up its borders to
world trade. “The paradox of under achievement in Africa is that although Africa
depends fairly heavily on trade, it has continued to maintain less open economies than in
any other of the world’s major regions, hence the related loss of the world market”3
(See trends in Table 2 below.)

2
Killick, T (2000), “ Globalization: Is it Good for the Poor?” Keynote paper, Joseph Mubiru Memorial
Lecture, Bank of Uganda, Kampala 17 November 2000.
3
Dr. Louis Kasekende, former Deputy Governor, Bank of Uganda. It is for this reason that the 1990’s are
described as a lost decade for Africa. Even trade within regional groupings is still protected.

3
Table 2: Indicative Trade statistics

Trade statistics (in billions $US): 1998 – 2001

Trade 1998 1999 2000 2001
Value % Value % Value % Value %
1. Total world exports of 6,590 100 6,823 100 7,621 100 7,602 100
(goods and services)
2. Africa: 134 2.0 141 2.1 176 2.3 171 2.2
Not including merchandise 107 1.6 112 1.6 145 1.9 141 1.9
Not including commercial 27 0.4 29 0.4 31 0.4 30 0.4
services
Source: World Trade Organization Annual Reports, 1999, 2001, 2002.

Rapid expansion of multinational companies from developed or rich countries operating

globally and impacting FDI is another important effect of globalisation. There is a clear
trend towards increasing FDI across most major regions of the world. However, the
figures in Table 3 show that Africa has attracted the lowest portion of FDI. Apparently
this is largely due to lack of supportive infrastructure, questions about the credibility of
its policies and institutional risks and uncertainties surrounding the domestic
environments in most African economies. The situation in Africa has limited Africa’s
benefits from globalisation to date.

Table: 3 Net Private Foreign Direct Investment Flows to Emerging Markets

(in US$ billions)

FDI 1992 1993 1994 1995 1996 1997 1998 1999

Total Net FDI 35.4 59.4 84.0 92.6 113.2 138.6 143.3 149.8
Africa 0.6 1.9 2.3 2.2 4.8 7.4 5.2 9.5
Asia 15.7 33.9 47.1 46.6 53.1 55.5 58.3 49.9
Crisis Asian Countries4 7.3 7.6 8.8 7.5 8.4 10.3 8.6 10.2
Western Hemisphere 13.9 13.4 23.1 24.7 39.5 53.1 56.1 63.6
Source: World Economic and Financial Surveys, September 2000

Other impacts of globalisation on the global scale include the overall reduction of
communication costs associated with the information technology revolution. E-commerce
is one of the outstanding aspects of trade that has grown tremendously due to
globalisation. In addition there have been trends towards the convergence of
governments’ approaches to economic policy making in Africa. Evidence of this is the
emergence of regional groupings such as SADC (Southern African Development
Community), the revival of the East African Community, NEPAD (New Partnership for
Africa’s Development) and the African Union (AU).

4
Indonesia, Korea, Malaysia, Philippines and Thailand

4
In particular, a positive effect of globalisation is the emerging trend towards trade in
production components. As developing countries opened their markets, manufacturers
from industrialized countries identified the benefit of relocating part of their
manufacturing processes to new locations especially among developing countries. The
attractions towards this could include proximity to cheaper labour and sometimes to
final consumer markets. Other factors include a reduction or even absence of tariffs and
tax exemptions offered by host countries of the subsidiary-manufacturing firms.
Developing countries have particularly benefited from this in terms of the resultant
employment opportunities for their people. Similarly, these relocations of manufacturing
firms (or parts of them) have introduced new technologies to developing countries.
With these technology transfers come training opportunities for local employees. Quite
often manufacturing subsidiaries have also been linked to establishment of distribution
networks that expand employment even further. This aspect of trade has impacted
entire regions in some cases, causing their benefits to transcend national borders.
“Developing countries would derive large gains from an easing of barriers to agricultural
products and to labour-intensive construction and maritime services”5.

Specific effects of globalisation on the world coffee trade

De-regularization of coffee trade and its effects. The main effect of globalisation on
the coffee trade is due to trade liberalisation that led to the collapse of the International
Coffee Organization (IOC). This meant that coffee-producing countries no longer had
guaranteed quotas in the coffee market. According to the World Trade Organization
(WTO) protocols, the coffee market was opened to unlimited supply. It is a well-known
fact that demand for most agricultural products (including coffee) is mostly inelastic.
Moreover, the greatest demand for coffee is in Western Countries where population
growth is low. Consequently, globalisation, coupled with the World Bank’s lending
money to Vietnam to produce coffee, has led to over-supply leading to reduction in
prices to the farmer. This may be seen by comparing Tables 4 and 5 regarding the global
production versus the falling world prices.

5
The World Bank, World Development Report 1999/2000, p 33

5
Table: 4 Coffee Supply and Exports

Total World Coffee Supply and Green Bean Exports

160
140
120
Bags x Million

100
80
60 Total Supply

40 Bean Exports
Linear (Total Supply)
20
Linear (Bean Exports)
0
1

83

85

87

89

91

93

95

97

99

01
8
19

Source: U.S. Department of Agriculture, Commodity Expert, Coffee News, 2001

Falling world prices. Other related developments on the global scene include the
phasing out of the cold war that saw many former and current communist countries join
the Western market system. Notable among these was Vietnam, which quickly rose
through the ranks of coffee producing countries to become the fourth largest producer
by 1999. Even though the Vietnamese have been somewhat discouraged from coffee
production due to falling world market prices, they still contribute significantly to
oversupply of coffee that continues to push world prices lower. Other countries such as
Angola witnessed the end of its civil war, which allowed communities to concentrate
more on coffee production among other things. There was also a short-lived boom in
world market prices, which rose to US $4.00 per kilogram (Kg) in 1994/95, mainly due
to the drastic fall in coffee supply by Brazil. This boom soon disappeared, and prices fell
to US $2.5 per Kg by 1996/97. Today the prices are at a 40-year low, a meagre US
$0.40-$0.50 per Kg.

6
Table 5: Trends in Coffee Prices

New York "C" Coffee Price Trends

Estimated Means
6.00
USD/Kg

4.00

2.00

0.00
92 93 94 95 96 97 98 99 00 01(f)
USD/Kg 1.32 1.30 4.40 2.95 2.42 3.85 2.75 2.20 1.65 1.43
Year

Source: USDA Commodity Expert, Coffee News, 2001

Reductions in government revenues. Transnational corporations and customers in the

West, particularly, benefit from declining coffee prices. In contrast, millions of people in
developing countries such as Uganda have suffered immensely from the resultant
reduction of government revenues as well as the fall in household income. The affected
governments have been increasingly constrained in their effort to provide essential
services for their people due to reduced incomes. This has significant implications on
the government’s credibility and even raises critical questions about the sovereignty of
entire states that cannot meet the basic needs of their people. Important ethical
questions include, “Is the world really unable to do anything about the falling prices?
Does a sufficient level of political or human will exist to limit the fall in world coffee
prices for the sake of the poor? Does the church understand the issues and/or its
obligation enough to speak out and advocate for the voiceless caught up in the apparent
endless drama?

Specific impacts of globalisation on coffee trade in Uganda: positive effects

Positive effects of changes in the policy framework
Influences of globalisation in Uganda initially started in the early 1980s in an attempt to
stabilize the Ugandan economy that had been severely damaged during the rule of Idi
Amin from 1971-1979. In 1980, the IMF and the World Bank tried to support a
stabilisation programme that included introduction of a more flexible exchange rate
policy, the deregulation of many prices, and a regular review of producer prices.
However, these economic stabilisation attempts collapsed completely following the
political instability and the civil war of 1980-1985 that eventually ushered the current
National Resistance Government (NRM) into power.

Following the change in government, the period 1987-1994 was characterized by major
structural adjustment and economic recovery programmes. As some IMF researchers

7
have observed, “…substantial structural reforms have taken place in the economy in the
areas of price liberalization, exchange and payment liberalization, public enterprise
reform, financial sector reform, civil service reform and army demobilization”6. During
1993/94, Uganda completed the liberalization of its exchange and trade system. On 5
April 1994, the Government accepted the obligations of Article VIII, Section 2, 3 and 4,
of the IMF’s Articles of Agreement, expressing its commitment to a free and open
exchange system. The period of 1996-2003 has also witnessed continued economic
growth averaging 6% per annum, relatively controlled inflation at about 5.5 per annum as
well as significant political changes for the better.

Despite these changes, GDP remains low. According to the Ministry of Finance,
Uganda’s economy is estimated to grow at 4.9% of GDP in 2003/04 – a reduction from
5.6% in 2002/03. The population growth rate stands at 3.4%7. Major improvements
towards GDP growth are still required. In particular, improvements are needed in
efficiency of resource allocation; increases in public and private savings rates as well as
investment-GDP ratio. Like elsewhere in Africa, infrastructure investments and
investments in human capital as well as upgrading the social well being of Ugandan
citizens remain key areas of improvement.

In Uganda, globalisation is illustrated in part by the kind of policy framework that

Uganda has pursued over the last one and a half decades. In line with the commitments
that Uganda made towards the WTO protocols, Uganda’s broad policy objectives have
continued to focus on:
(i) The need to stabilise the economy, partly through restoring the fiscal and
monetary discipline;
(ii) The liberalisation of consumer and producer prices in order to align prices in
favour of export-oriented production and import substitution;
(iii) Progressive movement towards a realistic, market-determined exchange rate
within a system of restrictions;
(iv) The strengthening of the balance of payments and the normalisation of relations
with creditors;
(v) The removal of trade restrictions;
(vi) The privatisation of and rationalisation of state enterprises;
(vii) The downsizing of the civil service and the army; and
(viii) The liberalisation of interest rates within a structured and more efficient financial
system capable of mobilizing savings and increasing investments so as to increase
the rate of economic growth.

The major positive effect of globalisation was the monetary policy framework that in
many ways been the vehicle for the few positive impacts of globalisation on coffee trade

6
Robert L Sharer, Hema R. De Zoysa, and Calvin A. McDonald, Uganda: Adjustment with Growth, 1987-94,
IMF Washington, March 1995.
7
Ministry of Finance, 2003/04 National Budget, June 2003, Kampala, Uganda.

8
in Uganda. The liberalisation of agricultural commodity prices and the abolition of
various marketing boards have had the short-term effect of increasing revenues to
farmers as well as lowering marketing costs, thus significantly raising the profitability of
agricultural production, coffee included. This was a positive development. Coffee
remains the leading export sector in Uganda’s economy, accounting for over US $100
million in export sales in the 2000/01-market year. Over 500,000 small farmers produce
coffee across the country with an average farm size of less than one hectare (ha). The
sector provides income to over 2 million people who live and work on these farms and
in the related support and downstream businesses. The coffee-producing communities
in Uganda are shown on the enclosed map.

Better liquidity for the farmer

Another positive effect of liberalisation is related to better liquidity. In case of Uganda,
before liberalisation, many farmers would sell their coffee and were given a type of
promissory notes from the Coffee Marketing Board. They would often wait for months
before actually receiving cash for the coffee they sold. Under the liberalised trading
arrangements, coffee buyers pay readily. In that sense the liberalised framework is more
beneficial to the farmer, even though there are increased uncertainties in the price that
farmers can expect.

There are a few other indirect effects of globalisation, such as improved telephone
communication, greater radio coverage and rural electrification programmes. These are
not specific to the coffee sector but which the rural coffee farmer benefits like other
citizens.

9
Negative effects
Reduced incomes
Even though the percentage of the world coffee price earned by the farmer is greater
under liberalisation (1993-2003), in real terms the earnings by the farmer have been
reduced 6.25 times. This is due to the impact of globalisation on over supply. For all
their labour, coffee farmers earn much less as evidenced by their reduced household
incomes. As a result, coffee-farming families are no longer able to afford a wide range of
basic necessities.

10
 Increased vulnerability of the rural farmer to world events
Before liberalisation, the Coffee Marketing Board (CMB) traded in coffee with foreign
coffee buyers on behalf of the government. The CMB operated in a way that guaranteed
coffee prices to the farmer based on the assured quotas that CMB negotiated on the
world market on behalf of the Uganda government. Even though the cost of the CMB
staff and infrastructure, as well as the coffee tax, reduced the farmer’s net pay, the
farmer was assured of a particular price when he/she decided to produce coffee. After
liberalisation and abolishment of the CMB, the farmer is more vulnerable to price
change shocks in the world market. This is a negative effect of globalisation. As an
expert at Makerere University’s Economic Policy and Research Centre (EPRC) stated,
“ …under globalisation, the rural farmer is like a tender plant that has been exposed to the full
vagaries of nature. This farmer must be protected otherwise he is bound to wither”.

Impact of Price reductions

During the pre-liberalisation period Ugandan farmers were earning approximately 30%
of the international coffee price. Under the liberalised coffee trade period, farmers
today earn approximately 50% of the world coffee price. Unfortunately, in real terms,
the actual has drastically fallen from about US $2.5 in 1994 to US $0.4 in May 2003. (For
example as of May 2003, the indicative farm gate price published by the Central Bank in
Uganda for Robusta US $0.20 per Kg which is approximately 50% of the world market
price that stood at about US $0.45 per Kg).

Mismatched Information systems

An important assumption under globalisation is the existence of a good information
system. In case of Uganda, the Uganda Coffee Development Authority has made
attempts to link with a private telecommunications firm, MTN, through which indicative
prices are communicated to farmers. Besides the information that is accessible through
MTN, the Central Bank (Bank of Uganda) publishes monthly price trends for different
coffee types. Yet access to this information by the farmers is still very low. Additional
efforts by government to facilitate information availability are via the District
Agricultural Training & Information Centres through the Agriculture Sector Programme
Support (ASPS). Under this initiative, each district is expected to create an information
hub with access to the Internet. These attempts appear to be steps in the right
direction. However, this effort is still new and has not yet proved effective. The overall
reality is that the rural coffee farmer in Uganda is not yet effectively connected to any
effective information systems to be able to benefit from globalisation – hence the
perpetual vulnerability that continues among Ugandan coffee farmers.

Inadequate Transport systems

Another basic assumption under globalisation is that there is presumed ease of
conveyance to facilitate easy transportation of factors of production as well as the
products themselves. In case of Uganda, transport facilities in rural areas where coffee is

11
produced are too inadequate to effectively contribute to the improvement of the
farmers’ benefits from globalisation. Approximately 50% of the cost of marketing coffee
is spent on transportation costs8. Moreover, because the farmers in Uganda mainly sell
unprocessed coffee, their product is usually bulky.

Unfair WTO conditionalities in the midst of weaknesses among national negotiators

According to officials from Economic Policy Research Centre located in Makerere
University in Kampala, another important factor that eventually aggravates the impacts
of globalisation on the Ugandan farmer is the failure of the Ugandan national negotiators.
The WTO sets conditionalities to which member countries are supposed to abide by.
The process of arriving at these conditionalities involves consultations of sorts. The
biggest constraint facing poor countries in this connection is that they have few qualified
negotiators that are able to articulate a favourable position for their countries.

To illustrate the weakness of negotiators from poor countries such as Uganda, the
officials dramatized it as follows: “The placenta in the mother’s womb has failed the unborn
baby. How can countries like Uganda build the kinds of systems that can play the ‘placenta
role’ effectively?” Often the negotiations follow several simultaneous tracks where
countries as Uganda are not effectively represented both in numbers and in terms of
competency of negotiators. The result includes poor interpretation of the WTO
protocols, which leads to poor policy formulation. (Today Uganda actually lacks a clear
trade policy, yet issues of regulation cannot be left to the private sector). Quite often,
Uganda relies on civil society activists to push her case, although these civil society
members often have non-cohesive agendas and do not have voting rights in WTO
forums.

Unfair trading arrangements enslaving the majority and benefiting the minority powerful
The first is the negative impact on local manufacturing firms that compete against
international importers. Since the larger manufacturing companies are already enjoying
economies of large-scale production, these giants easily force small manufacturing firms
in less developed countries out of business once they enter the markets where the small
firms operate. Without external assistance, small firms are unable to reorganise and
some end up bankrupt. According to OXFAM, “In more than 50 countries around the
world, 25 million coffee farmers and their families face poverty and misery due to a drastic fall
in world prices. The price paid to farmers fell more than 70% over the last five years. Taking
inflation into account, families are earning less from their product than their ancestors did 100
years ago! This crisis has been brought on by a world wide over supply of coffee that allows
coffee corporations to buy at rock bottom prices – prices so low that they don’t even cover the
cost of production”9.

8
Discussions with selected coffee farmers in Masaka District – May 2003.
9
OXFAM U.S., “The Global Coffee Crisis Report – Mugged: Poverty in Your Cup,” 27 May 2003.

12
Uganda is caught up in the same cycle. OXFAM goes further to quote the story of
Salome Kafuluzi from Uganda: “ Salome Kafuluzi lives in Uganda with her husband Peter and
13 of their children and grand children. They have planted and lived off coffee since 1945.
Salome says, ‘ We’re not happy. We’re failing in everything. We can’t buy essentials. We can’t
have meals like rice – just potatoes, beans and matooke10… We can’t send the children to
school.’”11 A final illustration of the unfairness in the coffee trade: “While the price paid
for coffee to producers has bottomed out, coffee processing corporations are making huge
profits. Four major coffee roasting companies – Nestle, Kraft, Sarah Lee and Procter & Gamble
– control nearly 50% percent of the world’s coffee market. They have to be part of the solution
to the coffee crisis”12.

Limited benefits from Foreign Direct Investment (FDI)

Under globalisation, FDI is assumed to easily flow towards low cost areas of production.
It is argued that when liberalisation is permitted to work, then producers are likely to
move their production capital to countries where labour is cheaper. In the case of
coffee production, locating processing industries in the coffee producing countries such
as like Uganda would attract additional benefits of creating employment and by reducing
the cost of transporting raw coffee, which tends to be bulky and robs the farmer of
additional income. Unfortunately, the liberalisation policies of the government of Uganda
have not yet attracted any significant FDI. The few new companies that were set up
focused only on ‘trade’ and not on the production aspects probably because of the
uncertainty of the world prices, which continue to plummet. The much-hyped increased
promise of FDI has not happened in Uganda’s case.

Unrealistic expectations in human capital movements

Globalisation promoters also extend the argument of free movement of factors of
production to include labour. In Uganda approximately 50% do not read or write. The
majority of coffee farmers are rural-based and live below the poverty line. Such people
lack what it takes to cross national borders to engage in credible trade due to language
barriers, knowledge and skills deficiencies. They have therefore not benefited from
globalisation by way of human capital movements.

Other negative factors impacting the rural farmer in the face of globalisation
There are a number of additional factors that affect the rural coffee farmer making it
doubly difficult for them to benefit from globalisation.
· Coffee wilt disease – In 1995 coffee wilt disease was identified in Uganda and has
spread to almost all coffee producing districts. According to the Annual Report of the
Masaka District Agriculture Officer, the farmers’ critical problems include: “ diseases and

10
Matooke is the local plantain commonly grown by tribes in the central and western parts of Uganda.
11
OXFAM U.S., loc. cit.
12
Ibid.

13
pests notably the coffee wilt disease which is threatening the coffee industry in some parts of
the district.”13 This is a double blow in light of the falling world prices.
· Weak National Policies – Officials from the EPRC contend that weaknesses in policy
formulation contributed to the spreading of coffee wilt disease to many parts of Uganda.
With weak policy formulation frameworks, rural farmers in countries like Uganda are
bound to suffer immensely. EPRC estimates that up to 50% of the coffee trees have
been affected by the coffee wilt disease in Luwero District, a traditional coffee-
producing area.

A necessary condition, therefore, before needy communities can truly benefit from
globalisation is a sound policy framework that is able to minimize the negative impacts of
globalisation while maximizing the positive effects there from. Furthermore, EPRC
argues that the absence of an effective “regulator,” that is, an appropriate policy and the
technical human resource that can enforce it, the wilt disease cannot be contained.
Withdrawal of government technicians and over reliance on non-Governmental
organisations (NGOs) is very presumptuous since NGOs generally lack the technically
competent people both in quality as well as in numbers necessary to deal with such
specialized fields.

A final example of the weak policies is with regard to efforts by government to liberalise
the provision of services even further via the National Agriculture Advisory
Development Services programme (NAADS). This initiative is intended to ultimately
commercialise extension service delivery. Farmers who request services will have to pay
directly for them. This raises the question of the most vulnerable farmers who may not
afford let alone know exactly what knowledge gaps they have. There is a dilemma of
how such farmers can be served.

Just as negative effects of globalisation are alarming, it is equally disturbing to see that
the church in Uganda has generally been silent or unable to speak out against the
political and economic injustices arising from globalisation in Uganda. The church has
not been able to tap its far reaching network and even the goodwill that it still enjoys
among the masses to voice the concerns of the farmers. This is like a double tragedy for
the rural coffee farmer. The challenging message that the church leadership needs to
articulate for the powerful who perpetuate the negative effects of globalisation among
the poor is summarized in the words of Psalm 82:2-4, “How long will you judge unjustly
and show partiality to the wicked? … Do justice to the weak (poor) and fatherless; maintain
the rights of the afflicted and needy. Deliver the poor and needy; rescue them out of the hand
of the wicked”. While this is not to criminalise the powerful transnational corporations
that control the global coffee trade, there is a clear call to them to take steps to relieve
the suffering of the poor. The church has the duty to voice this message clearly.

13
Masaka District Agriculture Officer, “Annual Report for year Ending December 2000,” p 12.

14
Recommendations
Renegotiate terms
Generally, globalisation may have some positive effects. To enhance some of these
positive effects, renegotiation of terms with the WTO and other trade partners is
needed. In this respect, requests for grace periods during which necessary safety nets,
appropriate policies and infrastructure can be worked on. These are particularly
relevant to the transport and communication sectors. This will however require
benevolent, patriotic Ugandan technicians who can study the WTO protocols. These
should be people who can adequately interpret Uganda’s reality and help to negotiate
appropriately with Uganda’s development partners. Besides, they should help to develop
appropriate policies that meet the requirements of the renegotiated protocols in ways
that benefit the poor farmers.

For the long-term, consideration should be given to the following

recommendations.
Special attention on International Communications Technology (ICT)
Build on the small efforts towards improving information communication technology to
expand the coverage. Place vital information and knowledge in the hands of farmers
countrywide. Do not simply avail information to farmers. Train them on how best to
use it for their advantage in the coffee trade. As farmers cut down their costs of
marketing through better information available to them, they may earn more and be
encouraged to produce even more.

Expand rural electrification system

An enlarged electric net will contribute towards adding value to both coffee and other
agricultural products, placing the farmer in a better position to earn a higher income
from his/her labours. This is one of the areas for negotiation with development
partners, along side hydroelectricity development. Solar energy also needs to be
developed as part of government policy to improve the living condition and production
environment of the majority of the people who live in rural areas.

Review institutional frameworks

Policies hang on institutional frameworks. Without appropriate structures for
implementation, the best of ideas can never be realized. The policies that govern the
Plan for Modernisation of Agriculture (PMA), for example, need to be backed by
effective institutional frameworks. For example, as long as the extension service
providers operate like business people or are simply NGO staff who do not cover all
farmers effectively, chances of PMA succeeding are minimal. Globalisation will not
benefit the coffee industry without an effective institutional framework for policy
development and implementation. Uganda needs to review the current institutional
framework that is expected to facilitate the implementation of the PMA to ensure
effectiveness especially for the Coffee industry, which is the backbone of the Ugandan

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economy. Special attention should be on developing technical capacities necessary in the
areas of policy formulation and technical back up for the large rural farming community.

Do not just encourage more production: focus on better quality brands that fetch better prices
Promote growing of new Arabica coffee trees in areas that can produce high-value
coffees (appellations, specialty, organic biodiversity). Arabica coffee still has greater
demand and attracts better price than Robusta coffee.

Promote coffee more intentionally and actively; develop special Uganda brands
Given the over supply on the world market, Uganda seriously needs to distinguish her
coffee brand through aggressive promotion activities. A few countries have made great
gains via this route.

Strengthen production and marketing network

Encourage and expand the recent revitalization of farmers’ cooperatives through
training and information, support towards processing, biodiversity, business skills,
understanding markets, input sourcing and selling the final products.

Civil society advocacy

Civil society, especially the church, must work towards a united front and speak out in
defence of rural coffee farmers who are currently stuck under the shackles of the falling
coffee prices perpetuated by actions of the powerful political and economic institutions.

Conclusion
Globalisation has had a number of effects on the coffee industry in general. Most of the
positive effects of globalisation on the coffee trade in Uganda are still only in “potential
terms”. There still remain major reforms, beginning on the global level and include
much-needed renegotiations of selected WTO terms and conditionalities. New aid
packages are needed with development partners, fostering activities that can address the
tremendous infrastructure improvements needed to enable Uganda to benefit from
globalisation. On the domestic scene, important policy reforms have to be undertaken
especially to cater for technical requirements necessary to backstop the production
efforts by the farmers. Lastly, for Uganda to benefit more from globalisation,
fundamental changes must be made in the capacity of political leaders, as well as that of
technicians (public servants), who play a big role in determining the economic decisions
that are made on the coffee industry.

Massive investments into education are necessary to uplift the overall human capital so
as to prepare a stage for greater value addition to the coffee products at all stages
within Uganda, so as to earn better incomes at family and national levels. Similar to
governments that are challenged to review their policies and strengthen their capacity
to negotiate with the powerful advocates of globalisation, civil society needs to

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rediscover parts of its vocation, especially the important role to advocate for the poor
in the face of virtually irreversible forces like globalisation.

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