A kilogram of coffee may leave a Ugandan farm at one price, be exported as green coffee at a higher price, be sold as roasted and packaged coffee at a much higher price, and finally generate an even larger amount when prepared and sold cup by cup in a café.

This often leads to an important question: who earns what from coffee?

Farmers sometimes observe the price of packaged coffee or the price of a cup in an international café and conclude that processors, exporters, roasters or retailers are keeping almost all the money. At the same time, businesses farther along the value chain argue that their prices must cover processing losses, transport, finance, machinery, packaging, rent, labour, taxes, marketing and many other expenses.

Both observations contain part of the truth. Coffee generally becomes more valuable as it moves closer to the final consumer, but the selling price received at each stage is not the same as the profit earned by the participant at that stage.

Central principle: The difference between the farm-gate price and the final consumer price represents accumulated value, costs, taxes and margins across the entire coffee value chain. It should not be treated as the profit of one trader, exporter, roaster or retailer.

This article examines the main participants in the coffee value chain, the value each participant creates, the costs and risks each one carries, and the reasons farmers often receive only a limited share of the final consumer expenditure.

Why the Coffee Value Chain Matters to Uganda

Coffee is one of Uganda’s most important agricultural commodities. More than 1.8 million Ugandan households grow coffee, while millions of other people depend on coffee through harvesting, transport, processing, trading, exporting and related services.

Uganda exported approximately 8.6 million 60-kilogram bags between June 2025 and May 2026, compared with about 7.4 million bags during the corresponding previous period. Export earnings over the same 12-month period reached approximately US$2.3 billion.

These figures demonstrate the national importance of coffee, but the total export value should not be interpreted as income earned entirely by farmers or exporters. The export value incorporates coffee purchased from farmers, aggregation, processing, transport, storage, financing, quality preparation, export administration and business margins.

The International Labour Organization’s mapping of Uganda’s coffee value chain also identifies an important difference between the farm-gate prices received by farmers and the export prices received farther along the chain.

The Main Stages of the Coffee Value Chain

The precise structure varies according to the type of coffee, location, processing method and final market. A simplified Ugandan coffee value chain may be represented as follows:

Input supplier → Farmer → Village trader or cooperative → Processor → Exporter → Importer → Roaster → Distributor → Retailer or café → Consumer

Not every coffee lot passes through every participant. A cooperative may combine aggregation, processing and exporting. A large exporter may own processing facilities. A roaster may import coffee directly, while a farmer group may sell specialty coffee directly to an overseas buyer.

Nevertheless, each stage normally performs a function that adds value or makes the coffee available to the next participant.

Value-chain stage Main participant Value created Main costs and risks
Input supply Nursery, fertilizer supplier, agro-input dealer or service provider Provides planting materials, inputs, equipment and technical services Inventory, credit, product quality, regulation and distribution
Production Farmer Establishes, maintains and harvests the coffee crop Land, labour, inputs, climate, pests, disease, yield and price risk
Aggregation Village trader, buying agent or cooperative Combines small quantities into commercially useful volumes Transport, working capital, moisture, quality and price risk
Primary processing Wet mill, dry mill, huller or cooperative Converts cherry, Kiboko or parchment into tradable green coffee Machinery, power, water, labour, drying and conversion losses
Export preparation Processor or exporter Grades, sorts, bags, finances and prepares coffee for export Quality rejection, storage, finance, compliance and logistics
International trade Exporter, importer or international trader Connects producing countries with overseas buyers and manages contracts Price, foreign-exchange, shipping, credit and counterparty risks
Roasting Roaster Develops flavour, creates blends, packages and brands coffee Roasting loss, machinery, energy, packaging and marketing
Distribution Wholesaler or distributor Moves finished coffee to retailers, hotels, restaurants and institutions Warehousing, delivery, credit, inventory and returned products
Retail Supermarket, shop or online seller Provides consumer access, convenience and product selection Rent, labour, stock, taxes, payment charges and unsold products
Beverage service Café, hotel or restaurant Converts roasted coffee into a prepared drink and customer experience Staff, rent, equipment, ingredients, utilities, service and wastage

Four Measures That Should Not Be Confused

A proper coffee value-chain analysis must distinguish revenue, value added, gross margin and net profit.

1. Revenue

Revenue is the total amount received from selling coffee or a coffee product.

Revenue = Quantity sold × Selling price per unit

A farmer who sells 1,000 kilograms of Kiboko at UGX 5,200 per kilogram records revenue of UGX 5.2 million. This is not the farmer’s profit because production and harvesting costs have not yet been deducted.

2. Value added

Value added measures the additional value created by a business after deducting the cost of goods and services purchased from the previous stage.

Value added = Selling value − Cost of externally purchased inputs and intermediate goods

A processor adds value by converting Kiboko or parchment into clean, graded coffee. A roaster adds value by transforming green coffee into a roasted, branded and packaged product.

3. Gross margin

Gross margin is the amount remaining after deducting the direct cost of the product sold.

Gross margin = Sales revenue − Direct cost of goods sold

Depending on the accounting method, gross margin may still have to cover salaries, rent, depreciation, interest, administration and marketing.

4. Net profit

Net profit is the amount remaining after deducting all operating expenses, finance costs, depreciation and taxes.

Net profit = Revenue − Direct costs − Operating expenses − Finance costs − Depreciation − Taxes
Important: A large difference between a participant’s purchase price and selling price does not necessarily mean that the participant earns an equally large profit.

Value Created by the Farmer

The farmer creates the biological product on which the entire value chain depends. The farmer prepares the land, plants the coffee, replaces dead trees, controls weeds, applies nutrients, manages pests and diseases, prunes, irrigates where possible, harvests and conducts initial post-harvest handling.

The farmer also carries some of the most difficult risks in the chain:

  • Drought and excessive rainfall;
  • Pest and disease outbreaks;
  • Poor flowering or fruit set;
  • Low yields and tree mortality;
  • Theft and labour shortages;
  • Input-price increases;
  • International price changes;
  • Exchange-rate movements;
  • Delayed payment by buyers.

The farmer may sell coffee as fresh cherry, dried cherry commonly called Kiboko, parchment Arabica or another locally recognised form. The product form has a major effect on the apparent price per kilogram.

A higher price for FAQ or exportable green coffee cannot be compared directly with the price of Kiboko or fresh cherry because processing removes moisture, husks, parchment, defects and other material. Several kilograms of an earlier product form may be required to produce one kilogram of clean coffee.

Farmer margin

Farmer operating margin = Coffee sales − Establishment, maintenance, harvesting and post-harvest costs

For perennial coffee, the analysis should also recognise establishment costs incurred before meaningful production begins. Ignoring the initial years of land preparation, planting and immature-tree maintenance can substantially overstate farmer profitability.

Value Created by Village Traders and Aggregators

Ugandan coffee is mainly produced by smallholders who may each have quantities that are too small to supply a processor or exporter directly. Village traders, buying agents and cooperatives aggregate these small quantities.

Aggregation creates value by:

  • Bringing together commercially useful volumes;
  • Providing a nearby market to farmers;
  • Reducing the farmer’s transport requirement;
  • Sorting coffee by broad quality or product type;
  • Providing market information;
  • Sometimes providing advance payments or production credit.

The trader’s purchase-to-sale price difference must cover transport, loading, unloading, weighing, bags, storage, moisture loss, rejected coffee, finance costs and price movements before resale.

Trader margin = Resale revenue − Coffee purchase cost − Transport − Handling − Storage − Finance costs − Physical and quality losses

A trader may buy coffee today and sell it several days later. If the market price falls during that period, the trader may earn a smaller margin or make a loss.

Value Created by Processors

Processors convert coffee from one physical form into another. Depending on the coffee and processing system, this may involve pulping, fermentation, washing, drying, hulling, grading, sorting and removal of defects.

Processing creates a more uniform and internationally tradable product, but it also involves conversion losses. Husks, parchment, moisture, broken beans and defects are removed from the saleable coffee.

Processing yield = Saleable processed coffee ÷ Raw coffee input

A processor’s apparent selling price must therefore be evaluated together with the quantity of raw coffee required to produce one kilogram of the final product.

The processor’s costs may include:

  • Purchase of raw coffee;
  • Electricity, fuel and water;
  • Machine operators and casual labour;
  • Repairs and maintenance;
  • Depreciation of machinery and buildings;
  • Bags and packaging materials;
  • Quality testing and grading;
  • Storage and insurance;
  • Processing losses and rejected beans.
Processor margin = Processed-coffee revenue − Raw coffee cost − Processing costs − Conversion and quality losses

Value Created by Exporters

Exporters purchase or receive processed coffee, prepare it to meet buyer specifications and arrange its sale and shipment to foreign markets.

Exporter functions may include:

  • Final grading, sorting and cleaning;
  • Quality analysis and cup testing;
  • Matching coffee to buyer specifications;
  • Financing stocks held before export;
  • Contract negotiation;
  • Export documentation and regulatory compliance;
  • Bagging, containerisation and inland transport;
  • Managing price, currency and buyer-default risks;
  • Traceability and certification administration.

The difference between the exporter’s purchase price and the free-on-board export price is not automatically exporter profit.

Exporter margin = Export sales value − Coffee purchase cost − Processing − Finance − Storage − Inland logistics − Compliance and administration

Exporters often require substantial working capital because they must purchase coffee, prepare it and hold it before receiving payment from the overseas buyer.

Illustration from Uganda’s Official Market Prices

Uganda’s official Daily Coffee Market Report for 4 June 2026 published the following indicative weekly farm-gate price ranges:

Coffee form Indicative farm-gate range
Robusta FAQ UGX 11,000–11,500 per kilogram
Robusta Kiboko UGX 5,000–5,500 per kilogram
Arabica parchment UGX 15,000–15,500 per kilogram
Drugar clean coffee UGX 14,000–15,000 per kilogram

The same report indicated a value of approximately UGX 14,195 per kilogram for Robusta Screen 18 coffee in registered sales.

It would be misleading to compare UGX 5,000–5,500 for Kiboko directly with UGX 14,195 for Screen 18 and conclude that the processor or exporter earned the entire difference. Kiboko still contains husk and other non-saleable weight, while Screen 18 is cleaned, graded coffee meeting a particular screen-size specification.

The correct comparison must account for:

  • The Kiboko-to-FAQ conversion ratio;
  • Moisture and physical weight loss;
  • Hulling and grading costs;
  • Defects and lower-grade beans;
  • Transport and handling;
  • Finance and storage;
  • The value of any recoverable by-products.
Analytical lesson: Coffee prices at different stages should first be converted to the same product form and quantity basis before margins are calculated.

Value Created by International Traders and Importers

International traders and importers connect exporters in producing countries with roasters in consuming countries.

They may provide:

  • Access to international buyers;
  • Price-risk management;
  • Foreign-exchange management;
  • Shipping and marine insurance;
  • Warehousing in the importing country;
  • Credit to roasters;
  • Quality and contract management;
  • Delivery of smaller quantities from a larger imported lot.

Their margins must cover shipping risks, financing periods, quality claims, currency movements and the possibility that a buyer fails to perform under a contract.

Value Created by Roasters

Roasting is one of the most important value-adding stages. The roaster transforms green coffee into a product with developed aroma and flavour, then may grind, blend, package, brand and distribute it.

Roasting also reduces physical weight as moisture and volatile compounds are lost. The roasted output from one kilogram of green coffee is therefore less than one kilogram.

Roasted output = Green coffee input × (1 − Roasting weight-loss percentage)

For example, an illustrative roasting loss of 16% would produce approximately 0.84 kilograms of roasted coffee from one kilogram of green coffee. The actual loss depends on coffee characteristics and roast level.

Roaster costs include:

  • Green coffee purchases;
  • Importing or domestic transport;
  • Roasting machinery and depreciation;
  • Energy and labour;
  • Roasting and quality-control losses;
  • Grinding where applicable;
  • Valves, bags, tins, labels and cartons;
  • Brand development and marketing;
  • Warehousing and distribution;
  • Unsold or expired products.
Roaster margin = Roasted-product revenue − Green coffee cost − Roasting loss − Production − Packaging − Distribution and marketing costs

A substantial part of the retail value may be created at this stage because the coffee changes from an agricultural commodity into a differentiated consumer product.

Value Created by Retailers

Retailers make packaged coffee available to consumers through supermarkets, specialist shops and online platforms.

The retailer provides location, convenience, product assortment, payment facilities and consumer access. Retail costs may include:

  • Purchase of packaged coffee;
  • Shop or warehouse rent;
  • Employee costs;
  • Utilities and security;
  • Payment-processing charges;
  • Taxes and regulatory compliance;
  • Marketing and promotions;
  • Damaged, expired or stolen stock;
  • Online-platform and delivery expenses.
Retailer margin = Retail selling price − Wholesale purchase price − Retail operating costs attributable to the product

Why a Cup of Coffee Has a Much Higher Final Value

A café converts roasted coffee into a prepared beverage and customer service experience. One kilogram of roasted coffee can produce many cups, depending on the dose used for each drink.

Suppose a café uses an illustrative dose of 18 grams of roasted coffee for one beverage:

Potential beverages per kilogram = 1,000 grams ÷ 18 grams = approximately 55 beverages

If each beverage is sold for UGX 10,000, the theoretical gross sales generated from one kilogram of roasted coffee would be approximately UGX 550,000.

It would be incorrect to conclude that the café earns UGX 550,000 as profit or that the difference between this amount and the farmer’s price is retained entirely by the café.

The café must also pay for:

  • The roasted coffee;
  • Milk, sugar, syrups and other ingredients;
  • Cups, lids, napkins and cleaning materials;
  • Baristas, supervisors and support staff;
  • Building rent and service charges;
  • Espresso machines, grinders and depreciation;
  • Electricity, water and internet;
  • Furniture and customer facilities;
  • Marketing, payment charges and taxes;
  • Product wastage and complimentary beverages;
  • Periods when the café has few or no customers.

The customer is therefore paying not only for coffee beans but also for preparation, convenience, location, service, equipment and the café environment.

Café net profit = Beverage sales − Coffee − Ingredients − Packaging − Labour − Occupancy − Equipment − Utilities − Administration − Taxes

Illustrative Value Build-up for One Kilogram of Green Coffee

The following example illustrates how value may accumulate. It is not a statement of actual industry margins and should not be used as a fixed benchmark.

Stage Illustrative activity How value increases Why the increase is not all profit
Farmer Produces and sells the raw coffee Creates the agricultural product Must recover production, harvesting and establishment costs
Aggregator Combines small quantities Creates commercial volume and market access Pays transport, handling, finance and storage costs
Processor Hulls, grades and sorts coffee Creates clean, standardised green coffee Experiences conversion loss and incurs machinery and energy costs
Exporter Prepares and ships coffee Connects the coffee to an international buyer Pays for finance, logistics, quality and compliance
Roaster Roasts, blends and packages Creates a branded consumer product Incurs roasting loss, packaging, labour and marketing costs
Retailer Sells packaged coffee Provides convenient consumer access Pays occupancy, staffing, inventory and tax costs
Café Prepares individual beverages Combines the product with service and experience Pays rent, labour, ingredients, equipment and utilities

Who Captures the Largest Share?

There is no universal percentage that applies to all coffee. Value distribution depends on the country, product format, brand, quality, certification, route to market and international coffee price.

The distribution will differ substantially between:

  • Commercial Robusta and specialty Arabica;
  • Fresh cherry, Kiboko, parchment and FAQ coffee;
  • Instant coffee and specialty whole-bean coffee;
  • Supermarket brands and direct-trade micro-lots;
  • Domestic consumption and overseas consumption;
  • Packaged coffee and café beverages;
  • Independent roasters and multinational brands.

The International Coffee Organization notes that final product prices have tended to benefit resellers, roasters and retailers more than producers, although downstream participants also undertake a larger share of certain investment, marketing and distribution costs.

Farmers may receive a relatively small proportion of final consumer expenditure, particularly when coffee is highly transformed, branded or sold as a prepared beverage. However, the farmer’s share normally increases when the price of green coffee rises and may fall when retail prices remain stable while farm-gate prices decline.

Why Farmers May Receive a Small Share of Final Consumer Value

Farmers often sell an undifferentiated product

A farmer selling ordinary Kiboko or parchment may have little ability to prove unique quality, origin or production practices. The coffee can therefore be priced mainly as a commodity.

Farmers sell before later value addition occurs

Roasting, packaging, branding and beverage preparation take place after the farmer has sold the coffee. Revenue from those activities belongs to the businesses performing them.

Farmers may have limited storage and finance

A farmer who urgently needs cash may sell immediately after harvest, even when market conditions are unfavourable. Traders and exporters with better financing may be able to hold stocks longer.

Small quantities weaken bargaining power

Individual smallholders may not produce enough coffee to negotiate directly with large processors or international buyers.

Quality differences may not be measured transparently

Farmers may not always receive clear feedback on moisture content, defects, cup quality, outturn or the price premium generated by better coffee.

The consumer may be buying a brand and service

The price of a packaged product or café beverage includes much more than the physical coffee. Consumers may be paying for convenience, reputation, location, design, service and lifestyle positioning.

How Farmers Can Capture More Value

Improving farmer returns does not necessarily require eliminating every intermediary. Some intermediaries provide essential services. The objective should be to improve efficiency, transparency and the farmer’s negotiating position.

Improve farm productivity

Higher yields can reduce the production cost per kilogram when achieved without disproportionately increasing expenditure.

Cost per kilogram = Total coffee production cost ÷ Saleable coffee quantity

Improve quality and consistency

Selective harvesting, clean drying, correct moisture management and proper storage can reduce discounts and create opportunities for quality premiums.

Measure conversion ratios

Farmers and cooperatives should understand how much fresh cherry, Kiboko or parchment is required to produce one kilogram of saleable green coffee.

Market collectively

Cooperatives and producer organisations can aggregate volumes, obtain better market information, invest in processing and negotiate with larger buyers.

Invest in processing where economically justified

Farmer organisations may capture processing margins by owning or contracting appropriate facilities. However, this should follow proper investment appraisal because machinery, buildings, labour, power and working capital can be expensive.

Use traceability and market differentiation

Traceable coffee with verified origin, quality or production characteristics may access buyers willing to pay premiums. Certification alone does not guarantee profitability; premiums must exceed the additional compliance and production costs.

Strengthen access to finance

Affordable finance can reduce distress selling and allow farmers or cooperatives to market coffee when quality and prices are more favourable.

Obtain transparent market information

Farmers should compare farm-gate prices with indicative export prices, exchange rates, international market movements and local conversion costs.

Participate in domestic roasting and branding

Ugandan businesses can retain more value domestically by roasting, packaging, branding and distributing coffee locally and internationally.

What Coffee Farm Analytics Should Measure

A coffee analytics platform can help farmers and organisations understand value distribution by recording every transformation and transaction.

Useful measurements include:

  • Production cost per farm, block, season and kilogram;
  • Harvest quantities by coffee form;
  • Fresh-cherry-to-parchment conversion;
  • Kiboko-to-FAQ outturn;
  • Processing losses and rejected grades;
  • Transport, handling and storage costs;
  • Prices received by date, grade, buyer and product form;
  • International reference prices and exchange rates;
  • Gross margin at each internal processing stage;
  • Quality premiums and certification costs;
  • Revenue and profit per kilogram of green-coffee equivalent.

The platform should convert all product forms to a common basis before comparing prices.

Equivalent green-coffee cost = Total cost of the original coffee quantity ÷ Kilograms of saleable green coffee obtained

This prevents a misleading comparison between the price of coffee cherry, Kiboko, parchment, FAQ, roasted coffee and prepared beverages.

A Better Framework for Evaluating Value Distribution

A strong value-chain study should calculate the following for every participant:

Measure Question answered
Purchase value How much did the participant pay for coffee from the previous stage?
Processing or conversion ratio How much saleable output was obtained from the input?
Sales revenue How much did the participant receive from customers?
Incremental value How much additional market value was created?
Direct operating cost What did it cost to perform the activity?
Gross margin What remained after the direct product costs?
Net profit What remained after all expenses, finance costs and taxes?
Capital employed How much machinery, inventory and working capital was required?
Risk carried Which production, market, quality, credit or currency risks were assumed?

Conclusion

Coffee rises substantially in value as it moves from the farmer to the final consumer. Farmers create the essential agricultural product and carry major biological and climate risks. Traders aggregate small quantities, processors transform coffee into tradable forms, exporters connect it to international markets, roasters create differentiated consumer products, and retailers and cafés provide access, convenience and service.

The farmer often receives only a limited share of final consumer expenditure, particularly where coffee is extensively processed, branded and sold as a prepared beverage. However, it is inaccurate to assume that the rest of the consumer price is pure profit retained by downstream businesses.

Every stage incurs costs and carries risks. The correct analysis must compare participants using a common coffee-equivalent quantity and distinguish revenue, value added, gross margin and net profit.

For Uganda, the opportunity is not merely to remove intermediaries. It is to improve farm productivity, measure production costs, strengthen quality, make conversion ratios transparent, expand collective marketing, improve access to finance and undertake commercially justified processing, roasting, packaging and branding.

Final conclusion: Farmers can capture a larger share of coffee’s final value when they produce efficiently, understand their costs, protect quality, obtain transparent market information and participate in economically viable value-adding activities.

Sources and Statistical Notes

  • International Labour Organization, Mapping the Coffee Value Chain in Uganda, June 2024.
  • International Coffee Organization reports and market-development publications on value distribution and coffee-sector sustainability.
  • Uganda Ministry of Agriculture, Animal Industry and Fisheries Coffee Department, monthly and daily coffee market reports.
  • World Coffee Research country information for Uganda.
  • Farm-gate and registered-sales prices are time-specific and should not be treated as permanent prices.
  • The café calculation is illustrative and does not represent a standard dose, selling price or profit margin for every café.
  • Value-chain percentages differ by country, coffee type, quality, product format, brand and route to market.