Global Coffee Prices in 2011 and the Incomes of the Ankole Coffee Producers’ Co-operative Union in Uganda

Abstract

This research investigates the degree of relationship between the monthly farm gate prices received by the farmer members of the Ankole Coffee Producers’ Co-operative Union, a Robusta coffee producing co-operative in Western Uganda, and the average monthly global Robusta coffee prices for the same months between January and August 2011. The literature provided discusses the results about the relationship gathered using the primary data collection method of interview guides to interview 12 finance managers of the 12 primary co-operatives under the Ankole Coffee Producers’ Co-operative Union, and corroborated with data gotten through secondary data collection methods of internet browsing for average monthly global Robusta coffee prices and US dollar exchange rates between the months of January and August 2011. The global Robusta coffee price was identified as the independent variable and the farmgate price paid to the farmers as the dependent variable. Data obtained from each of the research instruments was then statistically analysed. Line graph correlation analysis showed that although the relationship is not very consistent, there is generally a positive relationship between the farm-gate price and the global Robusta coffee price. Overall findings from this study suggest that farm-gate prices are directly related to the global Robusta coffee prices mainly because the management uses the global prices as basis for pricing and estimating the combined variable and fixed unit costing allowance in order to avoid making losses, although some peculiar circumstances such as price pressures from competitors and winning of lucrative fixed price forward sales prices do cause significant variations of the management’s desired degree of relationship between the two variables. This research therefore adds a new dimension to the body of literature that will help researchers’ and all other stakeholders’ efforts to understand the relationship between farm-gate prices and global Robusta coffee prices.