Coffee continued to be Uganda's most important cash crop throughout the 1980s. The government estimated that farmers planted approximately 191,700 hectares of robusta coffee, most of this in southeastern Uganda, and about 33,000 hectares of arabica coffee in high-altitude areas of southeastern and southwestern Uganda. These figures remained almost constant throughout the decade, although a substantial portion of the nation's coffee output was smuggled into neighboring countries to sell at higher prices. Between 1984 and 1986, the European Economic Community (EEC) financed a coffee rehabilitation program that gave improved coffee production a high priority. This program also supported research, extension work, and training programs to upgrade coffee farmers' skills and understanding of their role in the economy. Some funds were also used to rehabilitate coffee factories.

When the NRM seized power in 1986, Museveni set high priorities on improving coffee production, reducing the amount of coffee smuggled into neighboring countries, and diversifying export crops to reduce Uganda's dependence on world coffee prices. To accomplish these goals, in keeping with the second phase of the coffee rehabilitation program, the government raised coffee prices paid to producers in May 1986 and February 1987, claiming that the new prices more accurately reflected world market prices and local factors, such as inflation. The 1987 increase came after the Coffee Marketing Board launched an aggressive program to increase export volumes. Parchment (dried but unhulled) robusta producer prices rose from USh24 to USh29 per kilogram. Clean (hulled) robusta prices rose from USh44.40 to USh53.70 per kilogram. Prices for parchment arabica, grown primarily in the Bugisu district of southeastern Uganda, were USh62.50 a kilogram, up from USh50. Then in July 1988, the government again raised coffee prices from USh50 per kilogram to USh111 per kilogram for robusta, and from USh62 to USh125 per kilogram for arabica.

By December 1988, the Coffee Marketing Board was unable to pay farmers for new deliveries of coffee or to repay loans for previous purchases. The board owed USh1,000 million to its suppliers and USh2,500 million to the commercial banks, and although the government agreed to provide the funds to meet these obligations, some of them remained unpaid for another year.

Uganda was a member of the International Coffee Organization (ICO), a consortium of coffee-producing nations that set international production quotas and prices. The ICO set Uganda's annual export quota at only 4 percent of worldwide coffee exports. During December 1988, a wave of coffee buying pushed the ICO price up and triggered two increases of 1 million (60- kilogram) bags each in worldwide coffee production limits. The rising demand and rising price resulted in a 1989 global quota increase to 58 million bags. Uganda's export quota rose only by about 3,013 bags, however, bringing it to just over 2.3 million bags. Moreover, Uganda's entire quota increase was allocated to arabica coffee, which was grown primarily in the small southeastern region of ac2 f Bugisu. In revenue terms, Uganda's overall benefit from the world price increase was small, as prices for robusta coffee--the major export--remained depressed.

In 1989 Uganda's coffee production capacity exceeded its quota of 2.3 million bags, but export volumes were still diminished by economic and security problems, and large amounts of coffee were still being smuggled out of Uganda for sale in neighboring countries. Then in July 1989, the ICO agreement collapsed, as its members failed to agree on production quotas and prices, and they decided to allow market conditions to determine world coffee prices for two years. Coffee prices plummeted, and Uganda was unable to make up the lost revenues by increasing export volumes. In October 1989, the government devalued the shilling, making Uganda's coffee exports more competitive worldwide, but Ugandan officials still viewed the collapse of the ICO agreement as a devastating blow to the local economy. Fears that 1989 earnings for coffee exports would be substantially less than the US$264 million earned the previous year proved unfounded. Production in 1990, however, declined more than 20 percent to an estimated 133,000 tons valued at US$142 million because of drought, management problems, low prices, and a shift from coffee production to crops for local consumption.

Some coffee farmers cultivated cacao plants on land already producing robusta coffee. Cocoa production declined in the 1970s and 1980s, however, and market conditions discouraged international investors from viewing it as a potential counterweight to Uganda's reliance on coffee exports. Locally produced cocoa was of high quality, however, and the government continued to seek ways to rehabilitate the industry. Production remained low during the late 1980s, rising from 1,000 tons in 1986 to only 5,000 tons in 1989.

Data as of December 1990