KAWERI COFFEE PLANTATION: UGANDA’S BEST KEPT SECRET

Tucked away in the hills just outside Mubende town is Kaweri Coffee Plantation, a 2,512 hectare (6,207 acres) operation that is arguably Uganda’s best kept secret.

In the late 1990s the German company Neumann Kaffe Gruppe (NKG) was looking to start a robusta plantation. After assessing several options in South America, Asia and Africa they settled on Uganda.

“Uganda was chosen partly because it is part of the Greater Congo Basin, which is where the robusta coffee has its origins,” said Kaweri Coffee Plantation managing director Etienne Steyn.

NKG, which accounts for one in every ten kilogrammes of world coffee demand, got land in Mubende and set about setting up a plantation to rival similar operations in Brazil and Mexico.

Planting of 1800 hectares of coffee was completed between 2001 and 2004.

“All coffee nurseries within the district, and as far as Mbarara, were exhausted to meet the required number of seedlings needed for planting”. We now have our own nurseries,” Steyn said on a recent tour of the plantation.

There are currently about 1.8m trees on the plantation on 1650 hectares, now under coffee. Another 685 hectares (27% of the farm) is occupied by natural highland rain forest and is fast becoming a sanctuary for all sorts of wildlife – serval and civet cats, bush babies, vervet and colobus monkeys, various antelopes such as Reedbuck, duiker and bush buck, many rare species of butterflies and many species of birds.

Steyn said that the plantation, which harvested its first crop in 2005, is set to produce 2,500 tons of coffee this season. This means Kaweri will account for two in every hundred bags of coffee produced in Uganda, the largest single producer of coffee in the country.

According to the Uganda Coffee Development Authority (UCDA) there are about half a million coffee farmers in Uganda.

But Kaweri is not only the single highest coffee producer in Uganda but may also have the highest productivity per unit area than any other operation in the country.

"According to Steyn the farm’s productivity is about 2.2 tons per hectare compared to the national average for the robusta of half a ton per hectare.Better farming methods and the judicious use of research are at the heart of these high productivity numbers at Kaweri....

“Every month we take leaf samples and send them to UK for analysis, in addition annually we take soil samples for analysis in Brazil. From these we are able to determine accurately what fertilisers and other inputs we have to apply in different parts of the farm,” Steyn said.

The farm does not however employ irrigation as there are no streams or surface water on the farm and in 2013, Geophysical surveys showed no underground water was available for irrigation purposes.

Kaweri markets a washed robusta and has the largest wet processing plant on the continent with a capacity to process 350 tons of coffee cherry daily.

Internationally Kaweri has distinguished itself as having produced a robusta coffee that is traded by name: Colobus (Screen 18), Turaco (Screen 15) and Reed Buck (Screen 12) coffees, which allows the farm to command a premium over and above the normal prices.

Kaweri does not employ the use of outgrowers although it employs at least 600 people throughout the year and up to 3000 during the peak harvest period of six months.

“During harvesting we often exhaust all the available labour around the farm and have to go further afield to hire workers to harvest the crop,” Steyn said.

The nature of the robusta tree is such that it is unlikely that mechanised harvesting will replace manual labour, so for the duration of the 99-year lease NKG has on Kaweri we can expect that it will continue to serve as a source of employment throughout the year.

Beyond creating jobs for people in the area, Kaweri supports the surrounding communities and the farm has drilled  eight boreholes, built a new primary school in nearby Kitemba village and has helped in transferring know-how to local coffee farmers.

“Support activities include the establishment of extension services, development of professional farmer organisations, capacity building on value addition processes and market access as a result they are today marketing in bulk directly to exporters – cutting out the middleman and getting paid more,” Steyn said.

Steyn, himself a former coffee farmer in Zimbabwe said, it would an uphill task for local farmers trying to replicate the scale of the $20m (sh52b) Kaweri plantation.

Speaking from his experience in Zimbabwe he said commercial farmers have little support in Uganda.

“We had farmer associations in every district which provided extension services, lobbied for our interests, facilitated in warehousing. In addition there were agricultural banks whose services were structured taking into account the industry and its nuances,” Steyn said.

Despite a compensation case that is still winding its way through the courts and hangs over the project like a dark cloud, the farm’s target is to achieve production of 3,500 tons a season.

Industry players are genuinely impressed by what is happening in Kaweri.

“It’s a massive, well run operation and is a good story of what can be done in this country. Its just sad we don’t have a local testimony like that,” said Andrew Rugasira, founder and Chairman coffee processor Good African Coffee.

ends

UGANDA: STILL A LONG MARCH AHEAD

Uganda’s latest census indicates our population growth is slowing down, but also shows that we remain predominantly rural people, which suggests that despite our outstanding growth figures we still have a very long way to go before the benefits are evenly distributed.

The results issued by the Uganda Bureau of Statistics (UBOS) showed that annual population growth rate had slowed to 3.03% down from 3.3% recorded during the last head count a decade ago.

Uganda’s population growth rate, bested by only seven other countries in the world, has been a major cause for concern. If a country’s population grows too fast it will put strain on resources and the nation’s ability to ensure a good living for its people. Thankfully Uganda’s economy has grown faster than the population in all but four years in the last 28 years.

In theory, the economy chugging along at a faster rate than the increase in people is a good thing.

The challenge remains distribution of these economic benefits more equitably across the population.

Which brings us to our slow urbanisation rates.

According to the census about two in every ten Ugandans lives in the urban areas. An improvement from the last census when it was 1.5 for every ten people.

Observers of development notice that urbanisation is strongly related to rates of development. Urban areas concentrate people in small areas allowing for ease of provision of basic services. In addition they are an attractive market for industries and businesses, which in turn create jobs which in turn attract more people.

Invariably, in addition to higher economic growth, development statistics like access to health, clean water and opportunity are higher in urban areas.

In Uganda not only is more than half the economic activity generated in Kampala but important statistics such as, access to social services, clean water and electricity are way above anything anywhere in the country.

It is not by mistake that the most developed countries have at least eight in every ten of their populations living in the urban areas.

As it is Uganda is only more urbanised than Burundi in the region.

One can hazard that the structure of the Ugandan economy, which was planned by the colonialists as a small-holder farming economy, means there is little incentive to move away from our villages. This proved useful during the chaotic 1970s and 80s, because without this small holder farmer to keep us food sufficient, life would have been a lot more unbearable.

Across the border from us Kenya was developed to support a settler economy, so Africans were disposed of large swaths of land to accommodate huge agricultural concerns, a situation which remained little changed after independence.

"The nasty environment that are our towns aside, the benefits to the economy of concentrating people cannot be ignored, the question is how do we fast track the process? As it is our 4.4% annual rate of urbanisation does not cut it.

Rwanda is leading the way in this, facilitating population growth around economic activities, mostly agriculture, making it easier to provide roads, social services, electricity and markets for their produce. The project is still in early days but our southern neighbour has decided that is how they are going to fight poverty and keep the economy ticking along.

Clearly creating jobs by fostering an enabling environment for businesses is key to attracting populations. And it’s not the multi-billion projects that account for most job creation in any economy but the small to medium sized enterprises.

Recently in the World Bank’s annual Doing Business survey Uganda’s environment is not business friendly and a lot of the problem is to do with bureaucracy, its take Ugandan businesses ages to comply with the law on registration, filling taxes, getting justice through the courts and obtaining finance.

In addition and related, we need to improve education and health services, especially in our government health centers. Government services act as the standard, the better government services are, it then follows that private players will offer better services.

Of course the rate of urbanisation can outpace the local government’s capacity to provide services for its inhabitants, which can result in urban poor who are worse off than their rural cousins. That is an issue of the authorities need to keep in mind.

Uganda has averaged economic growth of about six percent for the last decade or so, but the trickle-down effect is not showing itself much in general improvements in the people’s wellbeing. If anything the income and wealth inequalities are widening threatening the progress made of the last three decades.

I believe if we get the economy correct population growth will sort itself out, through increased use of birth control and raising the age at which women give birth to their first children among other things. 

Focussing on making the urban areas more attractive for people through facilitating job creation,  improved infrastructure and social services will not only accelerate the economy’s growth but will ensure the benefits are enjoyed more widely.

pbusharizi@newvision.co.ug

Twitter @pbusharizi

RULE #1 NEVER LOSE MONEY ….

Last week my favourite investor Warren Buffett’s bought battery maker Duracell only days after he took a multi-million dollar loss in selling his company’s interest in embattled UK retailer Tesco.

Buffett’s company Berkshire Hathaway will pay $4.7b to Proctor & Gamble (P&G) using shares it owns in the consumer products company, a transaction which already has activists labeling it a tax dodge. Because the capital gains in his P&G holding will be rolled into the Duracell purchase he will not suffer the maximum capital gains tax applicable.

You don’t get to be the third richest man in the world by accident.

Every time Buffett pulls one of these deals out of the hat a rehash of his illustrious career is dusted up and paraded online, and it never fails to make for interesting reading.

Business insider had an online article “17 facts about Warren Buffett and his wealth that will blow your mind”, which among other things pointed out that 99% of his $63.3b was made after his 50^th birthday. Never mind that up to that point he had been investing in shares for 39 years or ever since he was 11!

Buffett is a real live example of the power of compounding. Fondly referred to as “The sage of Omaha”, Buffett turned 84 at the end of August.

There other jaw dropping facts like that last here he made $37m a day or about $1.5m an hour or about $25,000 a second last year.

Never mind too that in his life time he has donated more than $20b or the entire GDP of Uganda.

The facts about his wealth are always interesting reads but what serves as an eye opener is the thinking that generated this huge cash pile – by the way his company holds $50b in cash.

"The article “Warren Buffett’s most brilliant insights about investing” should be considered essential reading for business students, businessmen and anyone who wants to put his money on the line in entrepreneurial endeavour...

There is no space to list them here so one is best advised to Google the said articles, but several are enduring gems.

·        

 Rule number one, Never lose money; Rule number two, see rule number one – Buffet has lost money, every investor does. But by following a time tested model, where he buys companies that undervalued compared to their intrinsic value means the odds are in his favour in most of his investments. If he employs this method and he loses money he knows there is nothing he could do about it. Stick with the percentages so as not to lose money.

·         To be a successful investor you only need to know two things, how to value a company and how to think about market prices – with age has come wisdom from Buffett. And wisdom has a way of simplifying things in his experience that is all you need to know to be a successful investor. And he should know.

·         If you aren't willing to own a stock for ten years, don't even think about owning it for ten minutes – he says his best holding period is for ever. He has worked out that a good company, with good economics will appreciate in value beyond your wildest imagination over the long term. Some of his holdings like in American Express, Coca Cola and GEICO date back to the 1970s.

·         I am a better investor because I am a businessman, and a better businessman because I am an investor. – Whereas he has huge stock holdings his company also owns numerous businesses dealing in as varied products as ceramic tiles, paint, insurance, chocolate makers, jewelry, private jet leasing and precision tools. He applies the same criteria in judging his companies as he does his stock and vice versa.

Buffett’s methods are an open book and given his long experience – he bought his first share in 1941, he should be a reference for all business people of ambition.

THE EXAMS ARE HERE, BUT WHAT’S THE POINT?

This is exam season. Not only the big ones -- primary, O- and A-level leaving exams but also the end-of-year exams for all the classes in between.

They follow the same format as some of us did and our parents before us. The exams consist of a test on a given subject, to be done within a certain period, with pen on paper. The major change that has come over the last two decades is that in Math and Science papers the students can use calculators.

There has been a bit of tweaking of the curriculum to make this or that subject compulsory, to add a subject here and there, but the essence of the exam, which is to test rote knowledge, has stayed largely unchanged.

That is a problem because our education system was designed for the industrial age. In the industrial age the work is regimented, monotonous and calls for little to no creativity.

It is unlikely that when our kids finally get out into the world they will be facing the challenges for which this education system was set up.

In the brave new world, which is forcing itself on us, while in depth knowledge will still remain essential what will set one person apart from the rest will be their ability to make connections between seemingly unrelated fields, to innovate.

In the world that is fast becoming obsolete, one can get away with left brain thinking, which is rule bound and linear as opposed to right brain thinking, which is more artistic, lateral, empathetic and narrative.

In the workplace of the future it will not be a question of either/or, but one will have to be both a right and left brain operator.

It is already happening.

One reason Israel is the most innovative country per capita in the world according to authors Dan Senor and Saul Singer’sr book “Start Up Nation”, is because of the breadth and width of experience the average Israeli goes through by the time they hit adulthood. From their living conditions to their experience in the army to the encouragement by the society and environment to explore new avenues of doing things to taking initiative while solving challenges in a group setting.

There was a period when the generalist was king. The urban gentlemen of the Victorian age who had a working knowledge of law, medicine and engineering and a healthy appreciation for the arts. The industrial age shoved them aside and encouraged specialists. But now more than ever when innovation is going to be the differentiator the generalists are making a comeback.

The question then is how do our school systems need to be adapting to meet the needs of the future? Especially because they are already falling behind the demands of the workplace.

In a 2008 interview Thomas Friedman, journalist and decipher of modern trends, suggested that the competition on the future is not going to between economies or even companies but between individuals and their imaginations. That, will individuals be able to achieve what they can conceive.

So the countries and institutions that will be able to nurture imagination and allow it to actualise will be the winners.

Out of necessity the role of the school has to change. In times when information was scarce the schools were the repositories of information but now with embarrassing abundance of information the school’s role changes to one of bringing meaning to all this information and more importantly helping kids learn how to navigate and filter the widely available information.

"Essentially instead of imparting knowledge or teaching, more emphasis will be placed on learning how to learn. Which makes sense because in a fast evolving world you can’t stop learning after you leave school. The cliché learning is a continuous process will come alive...

But even more critical is that students will have to make the connections between all the subjects. While previously you learnt English, Math and history as distinct disciplines now students will be required to make connections.

So A-level combinations like Physics, Luganda and Islamics or Literature, Chemistry and Art will stop being the subject of great laughter.

Depth of knowledge will still be essential and even critical, but the worker of tomorrow will be called upon to solve problems outside his comfort zone and their ability to find the information or collaborate better with those who do, will be the more important skill.

But the even more important ingredient for our children, in ensuring that they become successful adults in whatever they set out to do, will be good parenting.

Unfortunately schools now shoulder the burden of feeding, character formation and providing role models for our children as parents’ power to work to afford the increasing fees and demands.

 In fact a Gallup poll released recently showed that the more successful people in the workplace had a teacher to not only look up to, but who also believed in the kid as an individual.

In the era of universal education teachers are going to be less likely to pay individual attention to individual students, the workers of the future will be mediocre to lousy unless the parents retake their rightful roles.