Agriculture
Uganda's merchandise trade deficit widened sharply to roughly $598 million in June 2026, after imports surged 33.2 percent year-on-year while export earnings crept up by only 11 percent, according to the Ministry of Finance's July 2026 Performance of the Economy Report. Buried inside the figures is a warning sign for the country's single most important cash crop: coffee earnings collapsed by more than a third in the same month, even as Uganda's farmers keep growing more of it than almost anyone else on the continent.
The numbers, released this week, capture a economy pulling in two directions at once. On one side, businesses are importing more machinery, vehicles, fuel and industrial inputs than at any point in recent memory, a sign, officials say, of expanding private investment. On the other, the commodity that has long anchored Uganda's export earnings and the livelihoods of an estimated 1.7 million coffee-farming households is generating markedly less money than it was twelve months ago, undercutting the very foreign exchange base the country needs to pay for those imports.
A widening gap, driven by fuel and machinery
Merchandise imports rose to about $1.88 billion in June 2026, up from roughly $1.41 billion in June 2025, an increase of close to $469 million in a single month. Nearly all of that growth came from the private sector, whose formal imports climbed 34.3 percent, from $1.38 billion to $1.85 billion, according to the Ministry of Finance report. Government imports moved in the opposite direction, falling 49.3 percent, from $22.13 million to just $11.21 million, over the same period.
Petroleum products accounted for one of the sharpest increases, up 66 percent from $184.38 million in June 2025 to $306.15 million in June 2026, reflecting both higher fuel demand and elevated global oil prices. Non-oil imports, spanning mineral products, chemicals, plastics, rubber, machinery, equipment and vehicles, also rose substantially, climbing 29.4 percent from $1.20 billion to $1.55 billion.
The Ministry frames the machinery and equipment component of that surge as potentially good news, if it holds. Imports channelled into productive capacity, such as processing equipment, irrigation infrastructure or transport, can expand the country's ability to produce and export more in future. But that benefit is not automatic; it depends on whether businesses actually deploy the equipment into manufacturing and agro-processing rather than short-term consumption, and whether the country's chronically underdeveloped power and road infrastructure can support the expansion.
Export earnings, meanwhile, grew only 11 percent, from $1.16 billion in June 2025 to $1.28 billion in June 2026, a pace of growth roughly a third as fast as the rise in imports. The gains that did materialise came mainly from gold, cotton, electricity, tobacco, maize and flowers, according to the ministry's breakdown. Coffee, historically the largest single export earner among agricultural commodities, moved the other way entirely.
Coffee earnings fall even as global prices firm elsewhere
Coffee export earnings dropped 36.3 percent, from $289.60 million in June 2025 to $184.43 million in June 2026, a loss of more than $105 million in a single month compared with the year before. The decline reflects both a fall in volumes and a drop in the average price fetched per kilogramme. Uganda exported 773,308 sixty-kilogramme bags of coffee in June 2026, down from just over 1.01 million bags a year earlier, a volume decline of roughly 24 percent. The average export price fell too, from $4.76 per kilogramme in June 2025 to $3.97 per kilogramme in June 2026.
The Ministry of Finance attributed the price slide primarily to rising global supply, particularly from Brazil and Vietnam, the world's two largest coffee producers, whose harvests have added significant volumes to the international market this year. That matters for Uganda because, unlike some competitors, its coffee sector remains dominated by smallholder farmers who have little ability to hedge against price swings or time their sales to catch a better market. When international prices soften, the effect is transmitted almost directly to farm-gate prices paid to growers in districts from Kasese to Kapchorwa to Masaka.
The timing is notable. Uganda has spent much of 2026 promoting its coffee sector on the international stage, from a record-breaking specialty coffee lot fetching $350.02 per kilogramme at a London auction in July, to the country's selection as this year's Portrait Country at the World of Coffee Expo in Brussels, to a national roadmap targeting 20 million bags of coffee exports annually by 2030. The June trade figures are a reminder that headline achievements at auctions and expos coexist with a much rougher reality in bulk commodity markets, where the vast majority of Uganda's coffee is actually sold, and where price is set in Chicago, London and Vietnam's export terminals, not in Kampala.
Italy remained Uganda's largest single coffee market in June, taking 31.3 percent of exports, followed by Sudan at 12.9 percent, Germany at 7.9 percent, India at 6.5 percent and Morocco at 5 percent, according to the ministry's data.
A dangerous reliance on one market
The trade report also flags a structural vulnerability that goes beyond coffee: Uganda's overall export base remains heavily concentrated in a handful of destinations. The Middle East absorbed 49.8 percent of Uganda's total merchandise exports in June, and within that regional total, the United Arab Emirates alone accounted for 98.9 percent, effectively meaning that close to half of everything Uganda sells abroad passes through a single country. The East African Community took 24.9 percent of exports, the European Union 11.2 percent, and Asia 8.5 percent. Together, these four blocs and countries absorbed 94.4 percent of Uganda's total merchandise exports for the month.
The Ministry itself warned that this concentration "exposes Uganda to external risks, including adverse economic developments or policy changes" in the UAE market specifically. Uganda's gold exports, which have surged in recent years partly through re-export and refining arrangements tied to the UAE, are a significant part of that exposure. A shift in Gulf demand, a change in trade or licensing policy, or a downturn in re-export volumes could hit Uganda's export revenues disproportionately hard given how little of the trade is spread across other markets.
What it means for farmers and the wider economy
For Uganda's coffee farmers, the June numbers translate into concrete losses at the farm gate. A fall in the average export price from $4.76 to $3.97 per kilogramme, combined with a 24 percent drop in volumes moved, means less foreign exchange is flowing back through the value chain to exporters, processors and, ultimately, growers. Farm-gate prices for Robusta and Arabica coffee have fluctuated sharply through 2026, and while global Arabica futures touched a six-week high in mid-August on concerns about a slow Brazilian harvest, the benefit of that rally has not yet been reflected in the June trade data, and it is not guaranteed to reach smallholders even if global prices do recover, given how many intermediaries sit between the farm and the export terminal.
More broadly, a widening trade deficit puts pressure on Uganda's foreign exchange reserves and the shilling's exchange rate, which in turn affects the cost of imported farm inputs such as fertiliser, agrochemicals and machinery parts that Uganda's agriculture sector depends on but does not produce domestically. A weaker shilling makes those imports more expensive even as coffee farmers are earning less per kilogramme sold abroad, a squeeze from both directions that has already shown up this year in Bank of Uganda surveys pointing to tightening agricultural credit conditions and rising lending rates.
The government's own response points toward diversification, both of products and markets, as the central strategy to close the gap. Agriculture still generates around 42 percent of Uganda's total export earnings and employs roughly 70 percent of the national workforce, according to Ministry of Agriculture figures, making the sector's export performance a matter of macroeconomic significance well beyond farming communities themselves. Programmes such as the newly announced AgriConnect Compact with the World Bank, government-backed value-addition parks for coffee and other crops, and efforts to expand market access beyond the Gulf and into markets such as the European Union and the African Continental Free Trade Area zone are all, in different ways, attempts to address the vulnerabilities exposed in the June trade numbers.
Whether those efforts bear fruit before the next reporting cycle will determine whether June 2026 was a one-month blip driven by a temporary supply glut from Brazil and Vietnam, or the start of a longer squeeze on Uganda's most important agricultural export earner, at a moment when the country can least afford one.
