* Exports now have to be inspected at Kenya border
* Traders say this could raise business costs
KAMPALA, March 23, 2011 - New rules on exporting coffee from Uganda could raise business costs and slow down exports, already hit by drought and disease, in Africa's second largest grower.
Coffee exporters said the new procedure requires them to offload their cargo for customs inspection at the border with Kenya. The authorities said the rule was crucial in verifying the goods for export through Kenya's port of Mombasa.
Uganda's coffee exports make up a major source of foreign exchange to the third biggest economy in east Africa.
Last week the Uganda Revenue Authority (URA) introduced new regulations requiring all exports leaving the country to be inspected at the border crossing.
"There's a government directive that was issued last week that all exports be verified at customs points and a communication was issued and the new procedures at customs will continue," URA spokesperson, Peter Kaujju, said.
David Barry, managing director of Kyagalanyi Coffee, said the new procedure, introduced without consulting the coffee industry, could also lead to tampering with the shipments while on their way to Kenya's Mombasa seaport.
"Offloading our cargo will mean a lot of delays in the export process and it will require manpower and extra costs and all these could affect shipments," he told Reuters on Wednesday.
"There's also a big risk because when we load our containers at the factories, we put our seals on the containers and these seals are important assurances to our buyers," Barry said.
"Now offloading at Malaba (customs point) would mean the seals have to be broken and thereafter we cannot guarantee the cargo has not been tampered with before reaching Mombasa," he said.
In the past exports were not subject to inspections since most of them were exempted from tax, he said.
"The new regulation seems to be in bad faith and from point of ignorance of the costs the exporter faces," said an official at coffee export firm Olam Uganda Ltd. who declined to be named.
URA said some exporters had been smuggling prohibited goods outside the country.
Uganda cultivates mainly Robusta coffee. It expects to ship 3.1 million 60-Kg bags in the 2010/11 (Oct-Sep) season, up from 2.67 million bags in last season.
According to figures from industry regulator Uganda Coffee Development Authority (UCDA), export volumes have been falling on an annual basis since November, mainly depressed by drought and disease.
The Authority projects March bean exports will hit 180,000 bags, down from 219,684 bags in the same month last year.------
