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| A coffee farmer |
Farmers' earnings from coffee
production are likely to decline due to the continued fall of prices in
the world market, the trend that will impact negatively on the country’s
poverty alleviation efforts.
Coffee farmers survive with difficulties
and some are reportedly abandoning their farms and switch to
alternative crops that demand short-term investment.
Coffee has been one of the country’s
largest export crops contributing approximately more than 120 million US
dollars (about 188.4bn/-) to export earnings and provide employment to
over 400,000 families.
The resulting market imbalances coupled with low
price elasticities of demand have led to the same downward pressure
across a broad spectrum of commodities.
Demand promotion is also problematic
because stakeholders may see their interests competing and the
experience with coffee indicates that there is need to establish
strategic aims to which all can subscribe.
The worrisome situation has
made the Tanzania Coffee Board (TCB) to take swift measures to arrest
the deteriorating situation of both production and coffee prices in the
world market.
The board plans to introduce a campaign
to promote local consumption of the product. TCB Director General,
Engineer Adolph Kumburu, told the ‘Daily News’ in Dar es Salaam recently
that other plans include penetration to strategic markets.
“These
measures will mitigate market volatility positively, resulting in job
creation”, he said.
He was speaking while commenting over
the deteriorating coffee prices in the weekly auctions in Moshi.
Coffee
prices continued with a downward trend at last week’s auction held in
Moshi largely due to the decline of the New York Coffee (NYC) market to
160 US cents from 180 US cents per pound in the same period under
review.
For example, the overall average price
at Moshi exchange were down by 1.11 US dollars (about 1,742.7/-) per 50
kilogrammes for Mild Arabica compared to the previous auction held a
week before. Similarly, the average prices were below the terminal
market by 7.01 US dollars (about 12,267.5/-) per 50 kilogrammes for Mild
Arabica.
The next auction will be held on
tomorrow (October 31) “The impact of the financial crisis in the Euro
zone and in the US has caused roasters and buyers to go very slow in
business,” remarked Engineer Kumburu.
He said the bumper coffee harvest
in Brazil was expected to produce about 50 million bags as compared to
45 million bags last season.
Likewise, Columbia is expected to have
premium crop of high output, where Tanzania coffee belongs to the same
group.
“Due to the increased output, the market is therefore switching
from bullish to bearish where the price of stocks is decreasing,” he
said.
If price deterioration persists, Engineer Kumburu said revenues
from the mainstream coffees are expected to decline as well with the
overall income falling to about 10 per cent.
However, he remarked that good quality
coffees were still fetching higher prices. Coffee is not just a drink.
It’s a global commodity. As one of the world’s most traded products
coffee industry employs millions of people around the world through its
growing, processing and trading stages.
But while the coffee trade is vital to
the politics, survival and economies of many developing nations, the
industry’s pricing and futures are decided in conference rooms and on
stock exchange floors in some of the world’s wealthiest cities.
As the
single most important tropical commodity accounting for almost half of
total net exports of tropical products, coffee has become emblematic of
the problems faced by all developing countries’ agricultural commodity
exports.
Further, coffee industry faces various
challenges including low productivity, insufficient farm gate prices due
to non optimal functioning of the internal marketing system business
environment, under exploited quality potential as well as threats from
climate change.
According to a recent survey, some
Tanzanian coffee farmers may receive as low as 50 per cent of the
auction price for the coffee that they produce. More generally, it is
estimated that coffee farmers receive an average 65 per cent to 70 per
cent of the FOB price.
The main on sequence of this low share
of income for coffee farmers is that coffee farming is currently not an
economically profitable activity.
Tanzania, Africa’s fourth largest
coffee producer after Ethiopia, Uganda and Ivory Coast, sells mainly
Arabica and some robusta coffee. Prices of its Arabica normally track
the New York market while those of robusta take their cue from London.
Source: The Daily News,http://www.dailynews.co.tz, reported by Sebastian Mrindonko in Dar es Salaam
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