Comprehensive reforms begun in 1990 as part of a structural adjustment pro‐ gram (Akiyama 2001). In January 1991, the Coffee Board was split into two entities: The Coffee Marketing Board, Ltd., which assumed the trading and processing functions of the former Board and the Uganda Coffee Development Authority (UCDA) with respon‐ sibilities of monitoring and regulating the industry and advising the government on policy issues. Further reforms were undertaken in 1992 by unifying the exchange re‐ gime. The Board gradually liquidated all its assets and withdrew form the industry marking the end of government’s involvement in marketing and trade activities.

By all accounts the reforms have been successful. Producers’ share of export prices doubled and growers receive payments promptly. For example, prior to 1990, producers’ share of export prices was less than 30 percent while following reforms the share reached 70 percent (see figure 1). This evidence is also corroborated by Akiyama (2001) and Krivonos (2003). Entrepreneurial activity increased enormously as the num‐ ber of active exporters reached more than 70 just 4 years after the reforms, while thou‐ sands of small traders entered the industry. The supply response, in part aided by the price boom of 1994/95, was spectacular with Uganda surpassing 4‐million bags of coffee for two years in a row—global coffee production during this period was 100 million bags. Most importantly, numerous authors have reported a well‐documented poverty reduction impact on households in the coffee‐growing regions (Deininger and Okidi 2003, Bussolo _et al._ 2005, Kappel _el al._ 2005).

Although during the initial stages of the reform process it was reported that cof‐ fee quality deteriorated, it appears that this was the case only temporarily as quality later recovered without leading to a loss of reputation (Ponte and Kawuma 2003, p. 45).<sup>**2**</sup> No backtracking of the reforms has taken place. Exception to this was the brief re‐ introduction of the export tax during the second half of 1994, which amounted to 17 percent of coffee earnings. However, in July 1995 the tax rate was substantially reduced and in July 1996 it was removed from the statute books thereby enabling coffee growers to enjoy the benefits of the price boom (Henstridge and Kasekende 2001).

Currently, UCDA is in charge of all regulatory aspects of the industry including monitoring quality, enforcing regulations, collecting statistics, undertaking promotion efforts, and managing the coffee replanting program. Often, UCDA’s functions are car‐ ried out in corroboration with other institutions with broader mandates (table 1). UCDA is financed by a 1 percent levy imposed on all coffee exports.

# **4. Stylized Facts of Uganda’s Coffee Industry**

When coffee prices started declining in 1997, so did production. However, production kept declining even when prices recovered. For example, between 2001 and 2005, the ICO robusta indicator increased 79 percent (from $0.61/kg to $1.09/kg) while the arabica indicator increased 88 percent (from $1.37/kg to $2.58/kg).<sup>**3**</sup> Yet, Uganda’s coffee exports declined by 21 percent, from 3.15 to 2.50 million bags. Even more worryingly, the ongo‐

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