May 9, 2003

Farmers in Kilimanjaro abandon coffee cultivation

Many more coffee farmers in Kilimanajaro Region are abandoning farming of the crop in favour of other crops or non-farm activities, Business Times has established. This is largely because of ever-falling coffee prices on the world market, coupled with a lack of readily accessed inputs.

The general manager of the Tanganyika Coffee Curing Company (TCCCo), Zebadiah Moshi, said recently that farmers have uprooted their coffee trees en masse. Some of them have taken up dairy farming, horticulture and the farming of barley, while others have simply abandoned their farms for other income-generating activities. Coffee farming virtually remains in the hands of geriatric farmers who, for obvious reasons, cannot abandon their lifelong occupation at this late hour. "In most cases, young people are no longer interested in coffee farming. They leave the task to old people who have no alternative," Moshi said.

Part of the problem has its roots in the liberalisation exercise that commenced in the 1980s. Liberalisation, Moshi said, has adversely affected the coffee industry. Among other things, it has allowed multiple licensing so that the same company or person could be a buyer, processor and exporter of coffee at the same time. "I strongly support privatisation," the manager said. "But I am not comfortable with our liberalisation policy as it has increased exploitation of farmers, and lowered the commodity's quality due to the fact that most buyers have formed cartels, thus killing both competition and quality."

Noting that there is no proper institution now which helps farmers to get inputs - as was the case before - Moshi lamented that liberalisation was introduced before other control mechanisms were put in place. "Before liberalisation, cooperatives had an effective monitoring system which recorded production and sales. Quality control mechanisms were in place. But such things no longer exist.

"Furthermore, liberalisation has resulted in a larger number of big coffee processors, but not producers. This in turn has increased the number of processing firms and not the production of the commodity," he said. The effects of liberalisation have, therefore, demoralised farmers, and most of them are now abandoning coffee farming. "If the situation is not redressed quickly, small holder coffee farmers will be wiped out, despite the fact that almost 80 per cent of the raw materials for the processing factories come from these farmers," he said. "The situation is also reflected in the Kilimanjaro economy, which is collapsing. The region was one of the most powerful economies in the country, thanks to coffee farming" he said.

As if that were not enough, Moshi said, multiple taxes and falling global prices are also undermining the coffee industry in the country. The price of coffee had fallen drastically, leading to lower production and threatening the existence of coffee processing factories. "The price has gone down from over Tsh1,000 per kilo (of arabica coffee) to Tsh500 a kilo. But the cost of producing the same kilo ranges from Tsh400 to 800. This has led to a decline in production from over 30,000 metric tons in the zone in 1995 to only 13,000 tonnes at present," he said.

He attributes the price decline to the flooding of the commodity by the major producers in the world market. "While Tanzania produces about 40,000 tonnes a year, Brazil produces about 40 million bags a year for the market. Vietnam have also entered the market, producing four million bags a year, with its Government heavily subsidising Vietnamese farmers. Worse still, these countries have voice in pricing at the world market," he said.

Tanzania's tax regime on agriculture is another weighty problem. Reports have it that Tanzania leads among the coffee producing countries in the world by having more taxes on the coffee industry. The taxes and levies start from the production process to the end.

"We've an education [for farmers] levy, a research fund levy, village levies, district cesses, VAT and a curing levy (for coffee processors). Then there is the Tanzania Coffee Board levy plus 20 per cent VAT, as well as 20 per cent VAT on packing bags. These taxes and levies exclude other costs, and are borne by the farmer at the end of the day," he added. Moshi says stakeholders in the industry have been pressing the government to review its tax regime and other policies towards the industry.

Oxfam International recently launched a global campaign to tackle the coffee crisis and force the corporate giants who dominate the US$60 billion industry to pay farmers a decent price. It has also severely censured multilateral organisations and transnational companies over the low coffee prices, saying millions of people in 45 coffee-growing countries are facing economic ruin. (Business Times, Dar es Salaam)

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