The effect of exchange rate fluctuations on earnings from coffee export in Uganda: a case of Uganda coffee development broad

Abstract

The purpose of this study was to analyze the impact of foreign exchange fluctuations on earnings from tea export in Uganda Coffee Development Authority (UCDA) in Uganda. The study was anchored on the following specific objectives; to determine how does exchange rate of foreign currencies affect the number of coffee exports in Uganda, to examine how inflation affects earnings from coffee in Uganda, to examine how the Government and politics affect earnings from coffee in Uganda The study adopted a descriptive research design and data was collected using questionnaires. The target population consisted of 50 employees of UCDA. A sample of 44 respondents was drawn and 44 questionnaires were distributed and all were filled and returned. The data were analyzed using descriptive analysis where the means and standard deviation were interpreted. Inferential statistics were also done using SPSS to establish regression and correlation among the variables. The results were presented in figures and tables. A Pearson correlation was done between tea exports and the factors above revealing that only foreign exchange risks directly affected coffee export in the firm. The study also sought to establish actions taken due to positive or negative evelopments in exchange rates on coffee export in Uganda and the majority of the respondents agreed that the company has entered a new foreign market where they did not have any sales or operations before.

A regression analysis was done between variables of inflation on tea earnings and the R square revealed that foreign exchange volatility and inflation affected tea earnings in the region. The findings based on the third research question revealed that policy and political factors affected the performance of the industry. It was also revealed that the company has a clear policy. A regression analysis done between the variables revealed that variation in tea export was caused by the variation in government, politics, foreign exchange, and coffee export. The study concludes that coffee export is exposed to foreign exchange risks and due to the firm operating in foreign countries the industry is highly exposed to transaction risk. The study recommends that foreign exchange volatility and economic factors such as inflation affect the profitability of the firm due to the high production. The monetary authorities, therefore, need to create and implement measures to curb high inflation and foreign exchange rates. Based on the findings, this study recommends that there is a need for political stability in the country. The study also recommends that the government need to formulate regulations that would create positive results situation all stakeholders in the industry