• Tanzania

Smallholders Fuel Coffee in Tanzania

Coffee has been a central part of Tanzanian culture and the country’s economy since the 16th century. Though its role has changed over the last four centuries, coffee still generates approximately 5% (about $100 million) of the country’s export revenue and employees 6% of the population (about 2.4 million people) both directly and indirectly.

Many of those employed in coffee are the 450,000 smallholders responsible for more than 90% of Tanzania’s 30,000-40,000 metric tons of coffee produced annually. These farmers cultivate plots between 0.5 to 3 hectares. The remaining 10% of total production is grown by larger estates found in the Arusha, Kilimanjaro and Mbeya regions.

A History of Coffee in Tanzania

Coffee Comes to Tanzania

The arrival of coffee in Tanzania is documented in oral history. The Haya tribe in Northwest Tanzania reportedly brought coffee back from Abyssinia (modern day Ethiopia) in the 16th century. This “Haya coffee”, or amwani, was a Robusta variety. Early Tanzanians prepared amwani by boiling unripe cherries with herbs and then smoking the mixture for several days. The resulting cherry mixture could be chewed whole.

The role of coffee in Haya culture was more for culture functions than daily consumption. Amwani was included in formal greetings, tributes to royals and religious rituals. Coffee use was ritualistic that anyone needed authorization from the royals to be able to grow coffee. This strict control of coffee growing also increased its value and status by restricting supply and making coffee rarer.

Germans Take Control of Tanzania and Its Coffee Industry

When Germans took control of East Africa in the late 19th century, they quickly instituted laws that spread coffee planting throughout the region. These laws were intended to force the Haya to enter the cash economy and, in turn, become less independent and more easily governable. When coffee became ubiquitous, the Haya lost the wealth that came with having a monopoly on it. At the same time, coffee also increased German profits from coffee exports.

Similarly to Rwanda, Tanzania has only recently become recognized for its specialty coffees. With increasingly better infrastructure, access to washing stations and farmer organization, Tanzania is now consistently producing high-quality specialty-grade coffees.

Coffee Production in Tanzania Today

The North Leads Coffee Production

Coffee growing in Tanzania was almost exclusively a Northern Tanzanian crop for a long time. The Kilimanjaro, Arusha, Tarime, Kagera, Kigoma and Karatu/Ngorongoro regions were prized for their ideal Arabica growing conditions. Coffee was so concentrated in the north that Moshi, a northern municipality, was the central—and only—hub for all coffee milling and sales until fairly recently.

Operations in Moshi grew to truly massive proportions in the 1950s and 1960s. Even though transportation from some of the few farms in the South to Moshi could take nearly a week, without another mill, most farms in the South still sent their parchment to Moshi for milling. There wasn’t enough production in the South at the time to make it beneficial to have a nearby mill until the 1970s and 1980s. Interestingly enough, the majority of coffee grown in Tanzania today is grown in the South.

Coffee in Tanzania Today

While historically almost all coffee grown in Tanzania was grown in the North, coffee cultivation has extended southwards in recent years. Today, in addition to the Northern coffee growing regions, coffee is also grown today in the southern regions of Ruvuma and Mbeya/Mbozi. Most Southern expansion of coffee growing occurred in the 1970s and 1980s and was encouraged by two projects supported by European backers.

With a range of altitudes, climates and rainfall patterns, each coffee growing region is unique. Here’s a quick overview of each region to help you familiarize yourself with different areas and coffees you might find in Tanzania.

North

Kilimanjaro

Altitude: 1,200 to 1,700 meters above sea level
Climate: Mild with warm days and cool nights. There are two rainy seasons. The “small rains” fall between November and December and the “big rains” between March and May
Main species: Arabica
Varieties: Kent, Typica, Bourbon and some Kenyan varieties (including SL varieties)
Farm Size: Mainly estate-grown coffees on old plantations. Some of the country’s oldest plantations are in Kilimanjaro region
Percent of total Tanzanian crop: 5%

 

Arusha

Altitude: 1,200 to 1,800 meters above sea level
Climate:  Similar to Kilimanjaro, which is only 75 kilometers away
Main species: Arabica
Varieties: Kent, Typica, Bourbon and some Kenyan varieties (including SL varieties)
Farm Size: Mix of smallholder cooperatives and private estates
Percent of total Tanzanian crop: <5%

 

Karatu / Ngorongoro

Altitude: 1,300 to 1,800 meters above sea level
Climate:  The higher altitudes in this area means warm days and cool nights
Main species: Arabica
Varieties: Kent, Typica, Bourbon and some experimentation with Geisha, Pacamara and SL varieties
Farm Size: Mainly private estates with some smallholder cooperatives.
Percent of total Tanzanian crop: <5%
Additional Information: Thanks to their proximity to Ngorongoro Crater, a famous wildlife preserve and safari location, farms are commonly ‘invaded’ by herds of elephants, buffalo and even rhinoceroses

 

Tarime

Altitude: 1,500 to 1,800 meters above sea level
Climate:  The wet season typically runs from March to June with a smaller rain from November to December
Main species: Arabica
Varieties: Kent, Typica, Bourbon and some Kenyan varieties
Farm Size: Predominately smallholder estates
Percent of total Tanzanian crop: <5%
Additional Information: Tarime is close to the Kenyan border. Due to its more remote location, smallholder cooperatives here are under-resourced and have neither washing stations nor expertise on home processing. Most coffees from Tarime are sundried on the ground and sold as lower quality coffee. Given the right investment and attention, Tarime could be a real standout region for coffee production

 

Kigoma

Altitude: 1,100 to 1,700 meters above sea level
Climate:  The wet season typically runs from October to December with a smaller rain from March to May
Main species: Arabica
Farm Size: Predominately smallholder estates with a small regional output of under 1,000 metric tons annually
Percent of total Tanzanian crop: 2-3%

 

Kagera

Altitude: 1,100 to 1,300 meters above sea level
Climate:  The wet season typically runs from October to December with a smaller rain from March to May
Main species: Robusta with small amounts of Arabica
Farm Size: Predominately smallholder estates who belong to cooperatives that are governed by large unions. These unions also control milling, storage, marketing and sales
Percent of total Tanzanian crop: Nearly 100% of Robusta crop and 25% of total coffee crop
Additional Information: In the past, large portions of coffee from Kagera were smuggled into Uganda. More recently, tighter border control and industry governance means most of the harvest from Kagera is now exported as Tanzanian coffee

 

South

Ruvuma

Altitude: 1,200 to 1,800 meters above sea level
Climate:  The wet season typically runs from November to January with smaller rains from March to May. The main district, Mbinga, is close to Lake Malawi, which means it has wetter weather. The consistent rain can make drying more complicated
Main species: Arabica
Varieties: Kent and Typica
Farm Size: Smallholder cooperatives of about 3 to 600 producers. About 50% of cooperatives operative full washing stations
Percent of total Tanzanian Arabica crop: 40-45%
Additional Information: Older rootstock in these areas often means that farmers must frequently combat coffee berry borer disease (CBD)

 

Mbeya / Mbozi

Altitude: 1,200 to 1,800 meters above sea level
Climate:  The wet season typically runs from November to January with smaller rains from March to May. The dry season is long here and there is little rain from May to November, which provides excellent drying conditions
Main species: Arabica
Varieties: Kent and Typica
Farm Size: About 90% smallholder farms with a few private estates
Percent of total Tanzanian Arabica crop: 35-40%
Additional Information: Coffees grown in these regions are considered among the best quality smallholder coffees in Tanzania. Most producers in the region work with cooperatives. Cooperative washing station are usually well managed and efficient

 

Understanding the Modern Auction System in Tanzania

The Roots of the Modern Auctions

The modern auction system plays a significant role in the coffee supply chain in Tanzania. The auction, which is similar in function to the Nairobi Coffee Exchange (NCE), can trace its beginnings to the early twentieth century when Tanzania (and Kenya) were governed by British colonial governments.

Today’s auction in Tanzania entered its modern incarnation in the 1980s, where a number of factors, including the breakdown of the International Coffee Agreement (ICA) and the end of the Cold War, impacted coffee sales and prices.

The auction system became popular in the 1980s when governments were trying to increase sales with European importers and roasters. Slower communication networks combined with changing supply chains meant that most European importers did not have direct connections in East Africa. So, the government stepped in to make their coffee market more accessible to European buyers.

A government system also meant that coffee moving through the auctions was, to some extent, backed by the reputation of the government. While importers may not be inclined to trust specific individuals with large deals, governments are generally understood to be more trustworthy trade partners than single people or private businesses. The government-owned auction system was, in effect, certified by the government as a valid way to buy good coffee in Tanzania.

Liberalization Reforms Change the Auction System

In 1994, the government introduced the first trading reforms that allowed private traders to buy cherry directly from farmers and process it in their own factories for the first time since before Tanzania’s independence in 1961.

These reforms saw an increase in processing capacity, marketing efficiency and increased investment in new plantings.

While the reforms did lead to an increase in farmer profits, allowing private companies to buy directly from farmers also meant that cooperative unions lost a share of the market and with it, potential profit. In effect, cooperative unions were now competing with private traders when purchasing cherry and parchment from farmers.

The Different Sides of the Auction

Since importers have now created many connections with people working along the coffee supply chain in Tanzania, the main intentions of today’s auction are to increase transparency and garner higher prices for farmers. There have been a number of modifications over the past few decades in an effort to make it more effective.

For many farmers, selling through the auction can mean that it takes longer to get paid, which can cause liquidity and cashflow issues. Farmers who sell through the auction must first sell to cooperative societies, who often wait until they have enough parchment to mill and market the coffee. From there, coffee is put on an offering list by the auction organizers and bid on a week after being advertised. Money can be slow to filter back to the farmers. While buyers must pay the Tanzanian Coffee Board (TCB) within 4 days (including weekends), compensation can take several weeks to reach cooperatives.

On the cooperative level, a lack of organization keeping track of each farmers’ contribution to each lot often means that cooperatives will wait until the entire harvest is sold through the auction before paying farmers. Some cooperatives also face a significant number of bureaucratic issues that can delay or reduce farmer payments. For farmers short on cash, the time it takes to get fully paid for their crops can mean they must put off getting medical help, educating their children or even affording basic necessities like food.

For coffee buyers, the auction presents both opportunities and difficulties. The auction system is an easy and accessible way to purchase coffee from Tanzania. When traceability is enforced along the supply chain, the auction can deliver the kind of traceable coffee many importers, roasters and customers are seeking.

However, many importers prefer to work directly with farmers or cooperative societies to focus on improving coffee quality closer to the source. Such projects can often mean benefits for both importers and farmers. Importers often get higher quality coffee that’s more traceable. Importers can provide farmers with financing, access to inputs and additional knowledge that helps them then sell their coffee for larger profits.

Purchasing and Trade Laws in Tanzania

In recent years, it’s been difficult to gauge the political climate in Tanzania. Some years, importers are allowed to source directly from farmers. Others, they can only buy through the auction system. These changes can lead to uncertainty that can make the benefits from investing in farmers and cooperative societies more unpredictable.

These conditions are par for the course for our in-country partner, Sucafina Tanzania. As we continue our involvement in Tanzania, the changing political climate can make it more difficult to invest long term in farmers and cooperatives. But it’s not impossible. Like many other exporters, Sucafina Tanzania have chosen to work more indirectly by partnering with other organizations, such as cooperatives, farmer groups and dry mills, who may not face the same restrictions in working directly with farmers.

Our Current Projects

Certification – Our in-country partner, Sucafina Tanzania, helped around 800 farmers Southern Tanzania obtain Rain Forest Alliance (RFA) certification. This will be scaled up to around 1,200 farmers in 2020. Sucafina Tanzania managed and paid for the certification training and compliance internally, and around 350 MT of certified coffee was purchased directly. The prices paid were significantly higher than auction.

Naturals – In 2020, Sucafina Tanzania will work with two Cooperatives in Southern Tanzania on specialty naturals. Conditions for high quality natural processing are ideal in areas of Southern Tanzania, and if done well, quality can be fantastic. Due to water scarcity in some regions, natural processing makes a lot of sense. For this project, Sucafina Tanzania will provide the training and financing, will provide the resources for raised bed construction and will provide working capital to get the project off the ground.

Direct Buying – In 2019/20, Sucafina Tanzania was one of the largest buyers of direct Arabica coffee, most of which was premium/specialty quality purchased at prices well above auction differentials. Sucafina Tanzania are a big believers in quality washed Arabica from Southern Tanzania and remain committed to supporting and showcasing producers focused on quality.

Stay tuned for more information about our involvement in Tanzania and how that translates into better coffee and better livelihoods for smallholder farmers.

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