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Team Composition 1 Team composition: Ruerd Ruben: Team Leader and economist Fayçal Boureima: environmental expert Catherine Allen: social expert David Gongwe Mhando: national expert Youri Dijkxhoorn: economist The report was produced through the financial support of the European Union. Its content is the sole responsibility of its authors and does not necessarily reflect the views of the European Commission. The report has been realised within a project financed by the European Union (VCA4D CTR 2016/375-804). Citation of this report: Ruben, R., Allen, C., Boureima, F., Mhando, D., Dijkxhoorn, Y. 2018. Coffee Value Chain Analysis in the Southern Highlands of Tanzania. Report for the European Commission, DG-DEVCO. Value Chain Analysis for Development Project (VCA4D CTR 2016/375-804), 135p + annexes. 2 Painting of Coffee Value Chain (courtesy City Coffee Company/HRNS) 3 Preface and acknowledgements This report provides an integrated assessment of the economic, social and environmental aspects of the coffee value chain in the Southern highlands of Tanzania. It is based on field work and data analysis by an interdisciplinary team of AGRINATURA experts, in close cooperation with national experts from Sokoine University of Agricultural (SUA). We would like to acknowledge the cooperation received from public, private and civic organizations involved in the Tanzanian coffee sector. Special thanks to the authorities of the Tanzanian Coffee Research Institute (TaCRI), the Tanzania Coffee Board (TCB) and staff from the District Offices in Mbozi, Mbeya and Ileja. We also thank the EU Delegation in Dar-es- Salaam for their support to this study. The members of our field teams (Dr. Zena Mpenda and Ms Lucia Madala and their colleagues) played crucial role in collection and analysis of valuable data from actors of coffee value chain in the three districts. Their efforts and commitment is highly appreciated. However the collection of data and information would not have been possible without the willingness of numerous farmers, cooperative leaders, village members, local NGO representatives and coffee plant managers that shared their insights with us. We are extremely grateful for their hospitality and openness, and trust that their views are adequately reflected in this report. Wageningen/Brussels, May 2018 4 Table of contents PREFACE AND ACKNOWLEDGEMENTS ............................................................................................................. 4 LIST OF FIGURES ............................................................................................................................................... 8 LIST OF ABBREVIATIONS ................................................................................................................................ 12 EXECUTIVE SUMMARY ................................................................................................................................... 13 1 FUNCTIONAL ANALYSIS OF THE COFFEE VALUE CHAIN IN TANZANIA .................................................... 17 1.1 BACKGROUND ............................................................................................................................................ 17 1.2 PRODUCTION .............................................................................................................................................. 17 1.1.1 Coffee production at the household level ..................................................................................... 20 1.2.1 Organic coffee ............................................................................................................................... 20 1.2.2 Impact of climate change ............................................................................................................. 23 1.3 COFFEE HARVESTING AND PROCESSING ............................................................................................................ 24 1.3 AUCTION ................................................................................................................................................... 27 1.4 EXPORTS .................................................................................................................................................... 28 1.5 MARKET OUTLETS ........................................................................................................................................ 29 1.6 CERTIFICATION ............................................................................................................................................ 30 1.7 PRICES ...................................................................................................................................................... 31 1.8 STRUCTURE AND GOVERNANCE OF THE TANZANIAN COFFEE SECTOR ...................................................................... 31 1.8.1 Institutions and governance of the coffee sector in Tanzania ...................................................... 32 1.8.2 Input provision Node ..................................................................................................................... 33 1.8.3 Production node ............................................................................................................................ 34 1.8.4 Processing node ............................................................................................................................ 35 1.8.5 Curing and warehouse node ......................................................................................................... 35 1.8.6 Marketing and exporting node ..................................................................................................... 35 1.9 STAKEHOLDER ANALYSIS OF THE COFFEE INDUSTRY IN TANZANIA ........................................................................... 35 1.9.1 Policy, regulation and licensing .................................................................................................... 36 1.9.2 Research ........................................................................................................................................ 38 1.9.3 Seedling production and distribution ............................................................................................ 38 1.9.4 Training of farmers ....................................................................................................................... 38 1.9.5 Infrastructure ................................................................................................................................ 39 1.9.6 Production ..................................................................................................................................... 40 1.9.7 Financing ....................................................................................................................................... 42 1.9.8 Processing (primary and secondary) ............................................................................................. 42 1.9.9 Marketing ..................................................................................................................................... 43 1.9.10 Taxation (Government and /district councils) .......................................................................... 44 1.9.11 The contribution of coffee to public revenues .......................................................................... 46 1.9.12 Transport .................................................................................................................................. 47 1.9.13 Auction ..................................................................................................................................... 47 1.9.14 Export ....................................................................................................................................... 48 1.10 KEY DRIVERS .......................................................................................................................................... 49 2 FIELD STUDY: SCOPE, APPROACH AND METHODS................................................................................. 51 2.1 REGIONAL IMPORTANCE OF THE COFFEE SECTOR ................................................................................................ 52 2.2 REGIONAL FARM STRUCTURE ......................................................................................................................... 54 2.3 REGIONAL CROPPING CALENDAR ..................................................................................................................... 56 2.4 SCOPE OF THE ECONOMIC ANALYSIS ................................................................................................................ 58 2.5 SCOPE OF THE ENVIRONMENTAL ANALYSIS ........................................................................................................ 59 2.6 SCOPE OF THE SOCIAL ANALYSIS ...................................................................................................................... 60 2.7 FIELD VISITS ................................................................................................................................................ 61 3 ECONOMIC ANALYSIS ........................................................................................................................... 64 3.1 FINANCIAL ANALYSIS ...................................................................................................................................
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