1 of 3
Tanzania’s move to allow farms to sell directly to international buyers will help boost quality and sales. Credit: Coffee Partners.
2 of 3
70% of Tanzania's coffee production is arabica, mostly from smallholder farms. Increasing stakeholder access to credit and farms' rising use of fertilizer is boosting the industry. Credit: Royal Coffee.
3 of 3
The national coffee board aims to lift specialty coffee from 37% of production today to 70% by the end of the 2024/2025 coffee year. Credit: Coffee Partners.
Tanzania, one of Africa’s top four coffee producers, is stepping up its coffee game, and the numbers prove it. Farmers are forecast to increase output by 3.7% in the 2021/2022 season. Analysts say that production is growing thanks to two main factors: increased use of fertilizer, as more growers gain access credit from financial institutions, and better operations among coffee marketing co-ops.
Other factors supporting expansion are improved support from the government's agricultural extension services; the entry of most coffee trees into the most productive period of their two-to-three-year yield cycle; and enhancement of Tanzania’s marketing systems.
The output forecast rose to 1.4 million 60-kg bags in the 2021/2022 coffee year, according to statistics by Tanzania Coffee Board (TCB), a government coffee industry regulator and the US Department of Agriculture (USDA).
Coffee production in Tanzania increased since 2019/2020, when the output was 1.25 million bags. This amount surged to 1.35 million bags in 2020/2021. A large share of the crop is arabica coffee grown using diverse farm systems, including pure stand/smallholder, intercropped and bananas/smallholder, and estate coffee production.
The uptrend in production on Tanzania's total coffee farming land area of 265,000 hectares gained momentum from domestic reforms and international demand. Farmers are now motivated to grow quality coffee thanks to new regulations that allow them to directly enter contracts with foreign buyers to eliminate middlemen, thereby increasing profitability for growers, according to USDA's annual report on Tanzania's coffee industry that was prepared by Benjamin Mtaki, Matt Snyder, and Jason Wrobel.
“Foreign buyers often require growers to adopt practices such as stumping, pruning, weeding, mulching, and fertilizing to help ensure quality production, and as these practices proliferate in Tanzania, yields will rise,” the report says. “Additionally, many coffee-growing regions are expected to enter the most productive period of their crop-bearing cycle, increasing yields every two to three years,” the report adds.
An estimated 90% of Tanzania’s mild arabica comes from smallholder farmers, while the remaining 10% comes from large coffee estates. The slopes of Mt. Kilimanjaro and Mt. Meru, which rise to altitudes of 1,000-2,500 meters above sea level, produce the largest share of the arabica coffee. This breed of coffee accounts for 70% of Tanzania’s total production.
The regions around Lake Victoria, at moderate elevations of 800–900 meters above sea level, particularly in the Kagera region, are synonymous with Tanzania’s robusta coffee, which accounts for 30% of the country’s total green coffee output.
Tanzania’s coffee cup profile is segmented into two categories: north and south. Northern coffees have a tendency to “to be pleasant in aroma, rich in acidity and body, sweet taste with balanced flavors due to the mineral nutrients from volcanic soils.” Southern coffee is described as “medium body and fine acidity with good fruity and floral aromatic taste.”
Tanzania’s coffee output will increase further under the recently launched 2021–2025 strategic plan of the Tanzania Coffee Board, which targets production of 5 million bags during the next four years. The plan calls for distributing at least 20 million seedlings every year and lifting the share of specialty coffee from 37% of production now to 70% by the end of the 2024/2025 coffee year.
The plan’s objectives are partly supported by the activities of various non-governmental organizations such as Vi-Agroforestry, Hanns R. Neumann Stiftung, Solidaridad, Mark Up, and Agricultural Non-State Actors Forum (ANSAF).
For example, Vi-Agroforestry, in partnership with ANSAF, BRAC International, Café Africa Tanzania, and Tanzania Coffee Research Institute (TaCRI), implemented a €3.75 million (US$3.95 million) Smallholder Coffee Development Project in Tanzania’s Southern Highlands (CODE-P), with financing from the European Union and Sweden, for a four-year period between 2020-2024.
The project will equip at least 24,000 new coffee farmers with skills on coffee production, postharvest, and marketing. The initiative will also “strengthen 60 coffee primary cooperatives actively working in the targeted areas and transform them into centers for providing and disseminating agricultural inputs, technology, and information.”
In what could boost production even further, TCB also intensified campaigns to promote higher domestic coffee consumption currently estimated at a modest 50,000 bags. Local consumption is partly constrained by what TCB says is consumer preference in Tanzania for drinking tea rather coffee due to tradition and the lower cost of tea.
On a per-capita basis, Tanzania’s annual consumption of coffee is a mere 0.6kg, compared, to 3.4kgs in the country’s leading coffee export destination, Japan. TCB says it looks forward to increasing local consumption to reach 15% of the nation’s coffee output within the next 10 years.
The three coffee marketing systems of internal sales at the farm gate, auctions, and direct exporting are being improved. For example, TCB recently introduced two new auction sites. TCB also opened a Tanzania Mercantile Exchange (TMX) for coffee, a move that could reduce substantially the country’s coffee held in stock to 520,000 bags as of 2021/2022.
TCB says it will utilize the platforms of the TMX for coffee auctions, thereby making it possible for the Exchange to organize the auctions and increase the speed and efficiency of coffee transactions in Tanzania, according to USDA.
Tanzania’s coffee auction is dominated by companies with an international outlook. Four of the biggest coffee buyers are Ibero (T) Ltd, Taylor (T) Winch Ltd, Dorman (T) Ltd, and Cotacof Ltd, which purchase 23%, 23%, 21%, and 12%, respectively, of the coffee on auction each year, or some 80% in total.
Other companies active in the coffee auction include Kagera Cooperative Union, Karagwe Estates Ltd, Amir Hamza (T) Ltd, CETCO Ltd, Mambo Coffee Ltd, and Olam (T) Ltd. Meanwhile, Tanzania now has a new law that allows premium coffee producers “to establish direct contacts with overseas buyers, engage with agricultural marketing and cooperative societies, and bypass auctions.”
The coffee exports market is dominated by Karagwe District Cooperative Union, which accounts for 62% of the direct coffee exports from Tanzania. Other notable direct exporters of coffee include Kagera Cooperative Union Ltd, AVIV Tanzania Ltd, and Kaderes Peasant Development Ltd., with an estimated share of 13%, 5%, and 2% respectively.
Tanzania’s traditional coffee export markets are: Japan, with a share of the total shipments at 27%; Germany, at 17%; Belgium, at 12%; and Italy, at 10%. Other buyers of Tanzania coffee include Morocco, US, Israel, South Korea, Russia, Spain, South Africa, India, Sweden, Canada, and Australia, each with an export market share ranging from 1–6%.
At the domestic market level, private companies such as Starbucks, City Coffee Ltd, and Taylor (T) Winch are supporting the national drive to upgrade coffee quality and increase domestic consumption.
During the 2021/22 coffee season, Tanzania’s coffee exports increased by 34% to 1.38 million bags “due to an increase in quality from improved marketing systems and relaxation of Covid-19 restrictions in Tanzania and neighboring countries.”
Demand for Tanzania’s coffee should increase in the short to medium term, as the quality of the country’s coffee continues to improve partly due to the new law allowing buyers to work directly with growers. Most of the international buyers condition purchase contracts on the requirement that beans meet competitive global standards.
“This is likely to increase international demand as coffee from Tanzania more closely aligns with consumer preferences from high-income countries, which are often the biggest importers of coffee,” the USDA says. With a population of more than 60 million, the East African country earned an estimated US$135.1 million during the 2020–2021 coffee season from exporting green coffee beans.
Although Tanzania’s coffee industry is on a growth trajectory for the last few years, both the government, through TCB, and private-sector coffee stakeholders, need to combine efforts to address persistent challenges such as low usage of fertilizers, underutilization of research findings, and stakeholders' lack of access to credit. Overcoming these problems will help ensure that growth of Tanzania’s coffee production, consumption, exports, and earnings remain on track.