Tuesday, December 16, 2008

Uganda's Top Coffee Exporting Co Faces Financial Squeeze

Uganda's top coffee exporting company is facing a financial squeeze due to the increased cost of borrowing as a result of the current global financial crisis, a company official told Dow Jones Newswires Monday.

An official with Kyagalanyi Coffee Ltd., Uganda's leading copper exporter, said the company has been relying heavily on offshore loans to run its operations in Uganda but as a result of the credit crunch, it is not easy to access offshore credit which is having a toll on the company operations.

"Its having a negative impact on our operations, we can no longer buy adequate stocks of coffee from local producers," he said. Kyagalanyi exports an average of 50,000 60-kilogram bags of coffee from Uganda every month and is the only Ugandan exporter supplying coffee to the U.S.-based Starbucks Corp. (SBUX).

Kyagalanyi aims to increase its export volumes by around 10% during Uganda's 2008-09 (October-September) coffee marketing season. Uganda's 2008-09 coffee output is projected to hit 3.5 million bags compared with 3.21 million bags produced last season.