UGANDA PULLS OUT OF COFFEE MARKET - TRADE SOURCES
Uganda's Coffee Marketing Board (CMB)
has stopped offering coffee on the international market because
it is unhappy with current prices, coffee trade sources said.
    The board suspended offerings last week but because of its
urgent need for cash it was not immediately clear how long it
could sustain, the sources added.
    Hundreds of Ugandan coffee farmers and processors have been
waiting several months for payment from the CMB, which has had
trouble finding enough railway wagons to move the coffee to the
Kenyan port of Mombasa.
    Foreign banks have contributed to the cash crisis by
holding up remittance of Uganda's hard currency earnings from
coffee exports, the government newspaper New Vision said.
    The banks are holding up to seven mln dlrs in coffee money
and President Yoweri Museveni is thinking of imposing a penalty
for such delays, it added.
    Banking sources said a third factor in the crisis was that
commercial banks have lent the board only 77 billion shillings
-- the equivalent of 55 mln dlrs -- for crop finance in the
current coffee year, while the government had asked for 100
billion.
    The CMB has 455,000 60-kg bags of coffee, about 15 pct of
annual production, stockpiled in Kampala awaiting shipment.
    The crop accounts for over 90 pct of Uganda's export
earnings and the recent slide in prices to four-year lows is
likely to more than offset an expected increase in production.
    CMB officials have forecast that because the government has
restored law and order in important growing areas, Uganda will
produce over three mln bags of coffee in the year ending
September 30, about 25 pct more than in 1985/6.
 REUTER
