I witnessed many things,' says Henry Wandwasi, slowly - and his eyes, I notice, have the sorrowful, dead look of a man still processing the unimaginable. 'There were 50 or 60 bodies in the river, blocking the water pump that supplied Mbale town. The water was the colour of blood, smelling of blood. In fact, people avoided drinking it and used spring water instead. We removed the bodies and took them to Mbale mortuary. Amin's people then used a tractor; they dug a mass grave and buried them like that.'

It was 1972, and Henry (now 68 and a security officer at the Gumutindo Coffee Cooperative in Mbale, eastern Uganda) was a senior police officer in the town. The despotic president Idi Amin Dada had recently come to power and was purging the army of soldiers loyal to his predecessor, Milton Obote.

'The army was on a recruitment drive,' Henry recalls, 'and dozens of boys joined up.' They were taken by bus to the Manafwa River, marched from the vehicle, shot dead and hurled into the rapids. It transpired that they were members of the northern Acholi tribe - feared by Amin, who was a Kakwa - and closely related to the Langi ethnic group to which Milton Obote belonged.

This and other stories drift through my mind as we begin our hike in the foothills of Mount Elgon - the vast volcano, straddling the border with Kenya - where Uganda's finest coffee is grown. Once, when Henry was on duty at the police station, Amin's thugs brought in a man with a black dog and held him in the cells. 'They took him food,' Henry recalls, 'but he never ate it, poor boy. I think he sensed he was going to die.' That afternoon, after the man was released, Henry heard gunshots in the forest. 'People ran from that direction, saying: "A man has been killed and they have put a dead dog on top of him." We knew this was the very man, and eventually his body was collected by Amin's people in a jeep. He was killed because he had named his dog Amin Dada as a joke. Like Amin, if you told the dog something once, he would do it.'

Then there was Obe, an old friend of Henry's, who was taken away by a 'half-caste' called Musa - one of Amin's intelligence officers and, according to Henry, 'a famous killer'. When Henry protested, he was apprehended himself and saved only by the intervention of a senior police colleague. Bundled into a vehicle with the registration 'UVS' (the sinister mark of Amin's death squads), Obe was never seen again. The reason? 'He was a prominent member of the UPC, the Uganda People's Congress,' says Henry, 'which was Obote's party.'

It is all chillingly reminiscent of Robert Mugabe's Zimbabwe, but the cyclical nature of African history is not the only lesson to be learnt from Henry's grim anecdotes. I am here to understand the story of coffee, and in Uganda that is largely a story of transformation and recovery from the dark days of the dictator. Like Mugabe, Amin plunged his country into economic meltdown - not, like Mugabe, by financial mismanagement, but by forcing the international community to impose a trade embargo as a protest against his murderous ways.

'Nothing came in, nothing went out,' says Willington Wamayeye, 47, general manager of the Gumutindo cooperative, 'so trade stagnated. Even if you had money, there was nothing to buy. My father had a small shop and, before Amin, sold paraffin, cooking oil, powdered milk, chewing gum... After Amin took over, those things vanished. Bread was there, then bread disappeared. In fact, people born between 1971 and 1974 never saw bread until the 1980s.'

Yet, ironically, these people - deprived of everything - had one resource that the whole world wanted: coffee, grown at high altitude on the fertile slopes of Mount Elgon, which was virtually indistinguishable from its famous Kenyan counterpart. Unable to export their beans legally, farmers traded them on the black market - and Kenya, a two-day trek from the Konokoyi valley where I am standing now, was their conduit to the coffee-drinking world.

Looking out over the verdant hillside, its surface etched by the occasional red-earth footpath, it is easy to imagine the scene. 'We smuggled coffee from behind Mabugu ridge down to the Kenyan border,' says Nimrod Wambette, our guide on the vertiginous hike to the old smuggler's trail. 'You see where the sun is striking the mountain opposite? That is Shigunga, where we would stop, check our coffee was safe, then rest before continuing the journey. We set off at dusk - eight or 10 of us, but joined by thousands of others, moving in single file and carrying coffee on our heads. The maximum load was 40 kilos. Often, we would walk for six hours at a time - but we would be sleepwalking.'

Like many other Ugandans I meet, Nimrod is a man of many parts: coffee farmer, trade unionist, local politician, chairman of both Gumutindo and the Konokoyi primary society (a cooperative of farmers that in turn supplies, and belongs to, a larger one), not to mention the headteacher of a school in Mbale. Now in his early fifties, he remembers the coffee-smuggling days well.

'Between 1971 and 1975, the marketing systems collapsed,' he says, 'so the smuggling peaked in 1977. We had stocks from 1975 and '76, but nowhere to sell our coffee - so people kept it in their houses, or in the primary society stores. All the stores were full. I started off carrying myself; then, when I had money, I hired people to carry for me. Everyone was doing it. I used my own pupils, from the class I was teaching - boys of 13 or 14.' The smugglers exchanged their coffee for Kenyan currency, which was spent on kerosene, salt, sugar, soap - and the occasional luxury. 'If you bought perfume for your girlfriend, you won her heart,' Nimrod beams. 'I bought one called Lady Gay.'

Willington throws back his head and laughs, recognising the brand name - and the scenario. As a contemporary of Nimrod's, he too smuggled coffee when he was in his teens. But despite their jocular manner, both have terrifying memories of the smugglers' trail, patrolled by Amin's henchmen who wanted a slice of the action. 'Soldiers would shoot to kill, they would steal our coffee,' Nimrod says. 'If the army was approaching, we would hide in the banana trees.' When they stopped, everyone put their coffee sacks down silently and in perfect unison.

Daniel Namudoto, 74 - an agricultural officer at Buginyana primary society, higher up Mount Elgon - knew several smugglers who died on the mountain. 'Many were caught by enemies along the way,' he says, meaning not just Amin's soldiers but hostile tribesmen with spears. 'They killed boys, they killed men, they killed women,' Daniel says. 'My own brother, Wolimbwa, was shot dead; I think he was killed by the army. We brought his body back to his house in the village, as is the custom. It took us a week to carry him home.'

Altogether, eight members of Daniel's 'clan' were murdered on the route to Kenya. It begs the question of what the Ugandan police were doing, turning a blind eye to a black-market economy that led to the death of so many of their countrymen. As a law enforcement officer, didn't Henry have a duty to stop it?

'I knew very well that it was happening,' he explains, 'but these people were very poor. The only way they could sell their coffee was by going to Kenya. I was sympathetic.' Besides, even as the poor farmers were smuggling coffee along the muddy mountain tracks that we are traversing now, Amin's army was doing it on main roads. 'The big smugglers were the army people,' Henry confirms. 'They were carrying huge quantities in lorries and trailers, escorted by officers. Colonels were taking it, brigadiers were taking it... and we could see them. How could I stop the poor people and let the big shots carry on?'

Two years later, Amin was ousted by his rival and nemesis, Obote. He fled to Libya, then relocated to Saudi Arabia where he died of multiple organ failure in 2003. Obote, who was no saint himself, began a programme of 'Cooperative Recovery', giving the coffee farmers vehicles and restoring the cooperative business model used to trade coffee on Mount Elgon since 1946.

Indeed, when you stroll through the centre of Mbale - less edgy than some towns in sub-Saharan Africa, but with armed police guarding the banks and anyone with anything living behind steel doors - the historical dominance of the co-ops is strongly evident. There on the main drag, with its faded colonial architecture, is the Stalinist former headquarters of the Bugisu Cooperative Union (BCU) - built in 1972, but with revenue from the 1950s and 1960s. In its heyday, the BCU was supplied by 250 primary societies with roughly 100,000 members; Gumutindo, by comparison, has 10 primary societies and 6,000 members. Then, the annual crop on Mount Elgon was 8,000 to 12,000 tonnes; in 2006-2007, the Gumutindo cooperative exported just 436 tonnes.

Mbale was a town built on coffee, but the golden age did not last long. For a decade or so after Amin's demise, Uganda's coffee industry was state-run and operated through large unions of cooperative societies, just like the BCU. These powerful unions provided bursaries for students and built new schools. In 1991, however, the coffee market was liberalised, ending the state monopoly on exports and allowing private buyers, including the big multinationals (Nestlé, Kraft et al) and their middlemen (Volcafe, Ecom, Sucafina, OneCafé), to enter the fray. The new competition from the private sector caused most of the coffee unions to collapse; BCU, the most resilient, survived until 2005.

Oliva Kishero, a farmer who grows coffee in Buginyana, knows what some private buyers are like. 'In 1989,' she says, 'I had 150 kilos of coffee to sell. I carried 50 kilos on my back, all the way down the mountain to Kamu's Market' - a seething mass of humanity a 30-minute drive away, selling charcoal, bamboo, green bananas, cassava, pineapples and breadfruit. (Here, for the record, we were surrounded by an angry mob who objected to us taking photographs.) 'I sold my coffee,' Oliva says, 'but when I went the following week with another 50 kilos, the market was no longer buying coffee. I walked back up the mountain and stored it in my house because I couldn't sell it.'

On another occasion, a private buyer came to Oliva's plantation (she prefers the term 'coffee garden') and offered her 3,000 Ugandan shillings per kilogram when Gumutindo was paying 2,800. 'He took a small amount of my coffee,' Oliva says, 'saying he would return for more. But he never did.'

It is against this background of uncertainty, unfulfilled promises and every man for himself that the British company Cafédirect arrived on Mount Elgon. Founded on a business model of fairness, integrity and transparency, its ethos could be described as 'Fairtrade Plus'. First, it is part-owned by the farmers - who make up 20 per cent of the board, ensuring their voice is heard. Then, as with all Fairtrade products, it pays farmers a fair and stable price (an agreed minimum, or the prevailing world market price, whichever is higher) together with a 'social premium' to be invested in the community.

From the outset, Cafédirect set this premium at 10 per cent of the price received, when the normal Fairtrade premium was five US cents per pound. (In June last year, however, the Fairtrade figure was doubled to 10 US cents per pound.) What's more, Cafédirect commits to buying a significant amount of coffee in advance, so farmers can raise finance and plan ahead. Finally, 60 per cent of Cafédirect's own profits are ploughed back into farming communities through its Producer Partnership Programme (PPP) - a farsightedness that goes way beyond Fairtrade. The money pays for management training, education (in areas such as fair trade, democracy and accountability) and organic certification. It is not unusual for Cafédirect to work with producers for three to five years, improving quality and building capacity, before bringing a product to market and reaping the financial benefits.

Much of that work is done on the ground by Twin, the alternative trading company that helped launch many of Britain's best-known Fairtrade brands - Cafédirect (coffee, tea, cocoa), Divine (chocolate), Oké (bananas) and Liberation (nuts). It is, in many ways, the unsung action hero of Fairtrade. Founded as the Third World Information Network in 1985, the company is adept at supply-chain management and logistics, continuing to ship coffee out of the Dominican Republic when Hurricane Georges struck in 1998, for example. 'Most buyers got out,' says Simon Billing of Twin, 'but we stayed in.'

The same tenacity can be seen in land-locked Uganda, where the coffee produced by Gumutindo is loaded onto trucks that join a 100-vehicle convoy heading for the Kenyan border, then on to the port of Mombasa. Like most of the lorries we see in Uganda, these ones are escorted by armed guards. Early this year, when ethnic violence erupted in Kenya, Twin considered shipping coffee out of Dar es Salaam in Tanzania - but that would have been a break with tradition. In the coffee-smuggling days, Kenya was the bridge between Ugandan farmers and consumers. Symbolically, that remains the case today.

That link would not be complete without Cafédirect, the brand, which bought its first Ugandan coffee from the BCU in 1994 when the industry was on its knees. Worldwide coffee prices had soared - good for farmers in the short term, but attracting get-rich-quick investors who rushed headlong into coffee-processing because the profits were high. Private buyers in Uganda snapped up all the coffee they could, regardless of quality, to feed the insatiable processing mills. Before long, Ugandan coffee had become a laughing stock.

That is why, in 1998, the charismatic Willington Wamayeye left his job at the BCU to build a new cooperative with Cafédirect's help. Gumutindo (which means 'excellent quality' in the local language, Lugisu) started life as a quality-improvement programme to raise the bar for Uganda's disillusioned farmers.

In the first year, Willington recruited nearly 200 growers from all over Mount Elgon, driving for hours to persuade them of the benefits of producing washed arabica (partly processed gourmet beans) instead of lower-grade unwashed coffee. By focusing on quality and consistency, farmers could rack up a few extra cents, Willington explained. (Today, that 'quality differential' ranges from five to 15 US cents per pound, and a grower like Oliva Kishero produces 4,400lb a year.) By boosting the reputation of Ugandan coffee, he told them, the farmers could guarantee themselves a market and an income. Secure in the knowledge that Cafédirect would buy all the high-quality beans they produced, the growers saw sense.

'I knew some of them from my BCU days,' Willington says, 'but they in turn led me to others.' When his car fell apart, destroyed by the battering it took from potholed mountain roads, he did his rounds on a motorbike. Then, as the number of Gumutindo farmers grew, Cafédirect took the decision to have all the co-op's coffee certified by the Soil Association - notching up a further organic premium of 20 cents per pound, in addition to the one for quality.

'We are winning the hearts of farmers with these premiums,' Nimrod tells me, but Willington puts it another way: 'The mountain is ours!' he says, theatrically, while admitting there is still a long way to go. Of the 200,000 smallholders who grow coffee on Mount Elgon, only 6,000 are members of Gumutindo - but that figure has doubled since early 2007. Protected from falling prices and the predatory tactics of private buyers, those farmers are empowered - and thanks to Cafédirect's education programme (evident from the wall charts we see at a newly built coffee store in Buginyana) six out of 10 Gumutindo farmers now understand the benefits and principles of Fairtrade practices.

At Oliva Kishero's farm on the slopes of Mount Elgon, you can instantly see the fruits of her labours. Instead of the mud huts and shacks we have seen all the way up the mountain, Oliva lives in a brand-new house with a concrete floor and rendered brick walls - albeit awaiting plaster. In this harsh region, where robbery is rife, the doors are made of steel and the windows are covered by security grills, but that does not detract from her achievement.

'I have built a house of coffee,' says Oliva, explaining how her washed arabica commands the highest premiums. From here, it is taken by road to Gumutindo's depot in Mbale - a 12-hour journey if the roads and weather are bad. Behind the house is a byre housing two or three zebu cattle and a goat. Within minutes we are drinking milk fresh from the cows and being greeted by Oliva's two youngest daughters, Mariam (five) and Rosette (nine), dressed in their best frocks and curtsying madly. Altogether, Oliva has seven children - modest by Ugandan standards (Daniel Namudoto, her father, has 22 children while Henry Wandwasi has 15) but still a lot of mouths to feed.

'If it weren't for the coffee premiums, my older children would not be at school,' says Oliva, who is treasurer of the Gumutindo cooperative and an inspiration to women farmers. In Uganda, primary education is free but secondary schools are paid for - and there is the additional cost of books and uniforms. On the smuggling trail, Nimrod had told me that his earnings from coffee almost match his net salary as a teacher: about £200 a month, but a sum that can make the difference between quality of life and mere survival.

A short stroll away are Oliva's coffee gardens - an apt term, since her 2,000 arabica trees grow cheek-by-jowl with tomatoes, potatoes, cabbages, beans and cowpeas (a legume with root nodules that 'fix' atmospheric nitrogen in the soil, acting as a natural fertiliser). Through the Producer Partnership Programme, Oliva has learnt to plant tall crops next to her coffee to prevent airborne pesticides blowing across from other farms; anything that is sprayed, such as tomatoes, must be planted downhill of her coffee shrubs. However, as Willington points out, 'Growing coffee organically is not a problem for our farmers. This is how their fathers did it, since few could afford agrochemicals.'

The coffee itself is magnificent: bushy, symmetrical trees with glossy green foliage, bearing enormous scarlet cherries. When Oliva splits and removes the skin, there are two fat coffee beans inside each, the size and colour of peanuts. 'Those must be AAA,' quips Willington - a reference to AA, the highest grade achievable for size and appearance. It will be a bumper crop.

Pruning and maintenance are partly responsible, but the fertile volcanic soil of Mount Elgon is God's gift to growers. Squatting down, I scoop up a handful of rich brown humus that reminds me, oddly enough, of freshly ground coffee. It is friable, like fine sawdust, but packed with organic matter. In this fecund environment, all manner of edible crops thrive.

On the hillside beyond Oliva's garden, every square inch of soil is cultivated - with row upon row of golden maize, green bananas, spinach, cassava, root vegetables and millet. It is as far from the Live Aid image of Africa as Konokoyi is from Kenya - and the natural abundance of the landscape reminds me of an important fact: there is no shortage of food in most of rural Africa, simply a lack of access to global markets. Growing subsistence crops may fill stomachs, but it provides no money for building houses or educating a family. Produce grown for cash may fetch a few Ugandan shillings at Kamu's Market, but it will not bring in the much-needed foreign currency that can transform lives and lever a family out of poverty. That access to global markets is what Cafédirect provides, helped by distant consumers who choose to buy Mount Elgon organic whole beans.

The main agent of transformation, however, is Willington Wamayeye himself. In the sunny walled compound of the Gumutindo cooperative - where groups of women sit on the grass, sorting dried beans by hand - he radiates the kind of infectious enthusiasm that all good entrepreneurs must have. 'Come back in three years,' he says, 'and we will have coffee to rival Ethiopia's, I promise!' Twin's Simon Billing believes that, with Willington's passion and drive, there is nothing to stop Gumutindo's coffee rivalling even Kenya's.

It is a lonely journey, since the recruitment and motivation of Mount Elgon's farmers has been virtually a one-man show. Without the expertise drafted in from Twin, Willington would have been on his own. 'That is my biggest regret about the Amin years,' he says, brow furrowed in thought, 'that a whole generation of the most senior, educated people in this country were targeted by him and murdered. They would have been my mentors, they were the crème de la crème. In Uganda, there is nobody with much experience.'

As a teenager growing up under Amin, Willington lost many potential role models. 'One of my uncles disappeared,' he says, 'he was quite senior in local administration and had been a functionary with the previous government, the Obote regime. He persisted and remained, he never went into exile.' One day, after his daughter's wedding, he left for Mbale in his VW Beetle and was never seen again. 'We have never found a dead body up until now, and that was in 1978,' Willington says. 'If he were alive, he would have come back. We don't have a gravestone for him, and that is very common here.'

The bishop of the diocese also vanished mysteriously. 'He performed my school confirmation,' says Willington, 'so I knew him well. I remember that a teacher from my school, who was from a different tribe, also disappeared. They were all killed, they never came back.'

Even children were not safe, living in an atmosphere of menace. 'The army visited our school in 1979,' says Willington, 'and they demanded to play football with us. We started to play... good football, because we were young and wanted to win... and we scored three goals. Then they started harassing and beating us; they went for us. At half-time, our teacher told us not to score any more goals, but to allow them to score. They managed four during the second half and won, so we were spared. If we'd won, their colleagues would have been unleashed to cane us. I don't think they would have gone as far as murdering us, only physical punishment.'

On the drive back to Entebbe airport, with all its dark associations of Israeli commando raids, I am reminded that Uganda is far from stable yet. In Kampala, we pass a pick-up truck carrying policemen brandishing Kalashnikovs ('they protect the people, and the army protects the government,' Willington had explained earlier). Then, on the tarmac at Entebbe, we see rows of helicopters and cargo planes bearing the UN insignia, next to canvas hangars where the next deployment is being discussed. In the north-west, near the Democratic Republic of Congo, tribal warfare is kicking off; in neighbouring Sudan, Kenya and Rwanda there is also ethnic unrest.

Out of this chaos has emerged a man of deep compassion, who cares about his country and now travels the world as an articulate spokesman for fair trade. 'What I say to these young guys is, "You can be like me",' says Willington. 'I tell them I grew up in the same environment - sharing blankets, sleeping on mats, going to fetch water before school, with no underwear, no shoes until I was 17. I have personal drive, yes - but before I worked within the Fairtrade family, I never felt inspired. It was only when I understood the relationships, understood the benefits for farmers, that I thought, "Yes, this is something worth doing". You don't want to pass through the world without leaving footprints behind. Creating employment, changing lives, linking people to people ... I think that legacy is very important.'

· Read more from Andrew Purvis on our food blog