Survival in a falling market
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CTA. 2002. Survival in a falling market. Rural Radio Resource Pack 02/5. Wageningen, The Netherlands: CTA.
Permanent link to this item: http://hdl.handle.net/10568/57351
The Country Director of Technoserve Tanzania, a non-government organisation, explains how the Tanzanian coffee market has been affected by a global glut in coffee production, and how both the government and the Tanzanian farmers need to improve their management of coffee production, so that it can compete with low-cost foreign coffee.
Survival in a falling market Cue: There?s an awful lot of coffee in Vietnam. In fact in the last five years, Vietnamese coffee harvests have grown from virtually zero to become the second largest in the world, behind Brazil. Unfortunately the world?s coffee farmers are now growing more than the world?s people are drinking, and with global over-production has come a global decline in prices. For coffee growers in countries like Tanzania, times are hard. How can smallholder coffee farmers survive in such a falling market? Technoserve is an NGO that is helping Tanzanian farmers to do exactly that, concentrating not on how to grow more coffee, but on finding the best prices at the coffee auctions. Lazarus Laiser spoke to Mr. Thomson Dixon, Country Director of Technoserve Tanzania, about the challenge for African coffee growers to compete on the world market. He began by asking Mr. Dixon what he thought coffee farmers needed to do to survive in the face of falling prices. IN: ?What we see happening ? OUT: ?individual farmers can prosper.? DUR?N 3?19? BACK ANNOUNCEMENT: A report from Tanzania described the challenges facing coffee growers. Many of the points will be relevant for other export crops. Transcript Dixon What we see happening in the coffee market is, you basically need to become a speciality coffee farmer to obtain good prices in today?s market. If your coffee quality is truly very very good, you can find very good prices in the market. Kenyan coffees are sometimes trading at over $2 per pound, because of their superb quality. I think Tanzania faces the same opportunities. We have had buyers in from Italy, we have had buyers in from the United States, expressing a very strong interest in Tanzanian coffee. However, uniformly they are saying that the quality is not there yet. And my feeling is that if a farmer, or a group of farmers fail to bring their quality up, they will face continued intense competition from low cost Vietnamese producers. So the answer to the question really is to get to the top of the market, be the best quality you possibly can, and there you have the best chance of survival. Laiser And now I would like to ask you as an expert, what are the government actions in terms of both protecting against dangers, and supporting farmers efforts to take advantage of the market? Dixon The government can provide a context, make sure that the laws are clear, make sure that the conditions under which business takes place are secure. We are facing some difficulties this year because the regulations for the coffee harvest this season have not been published yet, and therefore I think that a lot of farmers, and a lot of buyers are maybe somewhat confused about what is permitted and what is not permitted. So I think that number one the government must act with great clarity on these issues. And I think that in terms of farmers, it?s very important for the farmers to be educated on how the market works, and what the customers are looking for, so that farmers can produce to the needs of the customer. Because, when you have an Italian buyer in, saying ?I would like to see it prepared in this fashion or that fashion?, you have to be aware of that, and balance the pros and cons of doing that. And I think that is where the private sector, together perhaps with government officials, can come together and create the strategies for attending to the market. Laiser What can non-government organisations do in order to support small-scale farmers? Dixon They can do a variety of things. In the case of Technoserve, we are assisting groups of small farmers to take their coffee to auction, look for the best price possible at auction. We believe very strongly in adding value by doing pulping of the coffee, bulking that coffee into 5, 10, 15 or 20 ton units, and selling that as a single unit at the auction. This is really what the government was trying to do many years ago, and Tanzanian coffee was superb many years ago, and developed a tremendous name for its quality. But then those pulperies fell into disuse, and it became an individual activity instead. It is definitely time for farmers to be putting in pulperies again, and this will be what it takes to pull the coffee quality up, and that way the nation and the individual farmers can prosper. End of track.