1. ‘Sustainable Coffee’ Exports from Tanzania Evelyne A. Lazaro & Jeremiah A. Makindara

2. Introduction  In the last two decades, prices for traditional agricultural export crops in the world market declined.  Price of coffee, for example, reached the lowest level ever recorded in real terms between 2001 and 2002 Figure 1: Traditional crops export prices

3. Introduction cont.  Low price of coffee, Due to structural changes in the global coffee market, including production innovation in Brazil and booming supply from Vietnam, and partly due to changes in corporate strategies among the largest roasters **The coffee price has currently recovered from the lowest price of 2002/2003 season. For example in Tanzania the average coffee auction price was USD 41.61 USD/50 kg bag during 2002/2003 season but increased to USD 89.20/50 kg bag during 2006/2007 season.

4. Introduction cont. In Tanzania,  Major decline in the value of exports  Coffee’s contribution to total exports dropped (see Figure 3).  A general decline in the contribution of the agric. sector to GDP and  Lower rates of growth of the agricultural sector compared to other sectors Figure 3: Proportional contribution of coffee to total exports (by value

5. Objective.  To identify critical areas in relation to sustainability standards (reference to Utz certified) compliance in coffee  Coffee the main traditional export crop for Tanzania

6. Markets  One possibility for increasing the value of agricultural exports is through sales to emerging, niche and value-added markets  Such as: specialty, fair trade, organic, and Utz-certified coffee.  This requires compliance to standards

7. Standards compliance  Requirements for compliance to standards can be a barrier for developing countries to participate in trade and,  May as well lead to the exclusion of small scale producers in developing countries from global supply chains.  While standards can also help developing countries to upgrade their market competitiveness and improve agricultural practices.  Complying with new standards entails costs, benefits, and changing levels of risks and uncertainty.

8. Tanzania experience  Only large scale estate farms have so far complied with standards  Small holder coffee producers who are the majority are yet to respond to this demand

9. Experience elsewhere  Cooperatives and smallholder producer groups export sustainability-certified coffees  Private exporters and support organizations have a key role in facilitating smallholder farmers.

10. Coffee industry regulations  Tanzania Coffee Board (TCB) regulate the coffee industry in Tanzania & operates the coffee auction  Focus on sustainability standards in coffee regulations is limited.  Coffee regulations encourage the production and direct export of high quality coffee.  But, there are no specific rules that guide the sale of sustainable coffee at the auction or that allow direct exports

11. Standards & smallholder coffee  Smallholder producers and cooperatives that are certified in elsewhere have been facilitated by multinational companies, international organizations and or NGOs. The question for Tanzania is:  Whether there is a conducive regulatory environment for such involvement.

12. Conclusion  The coffee auction system does not have specific provisions for sustainability certified coffee  The current approach in marketing Tanzanian coffee emphasizes coffee quality grades with little focus on current trends on certification and standards in coffee  Two arguments for certification are that: i) It encourages production of high quality coffee that can fetch premium prices ii) It allows the application of new knowledge, management skills and technology that will strengthen business in coffee.

13. Policy Recommendations  Revision of coffee export rules to make provisions for certified coffee. (note possibility that large amounts of Utz certified and other sustainability coffee could undermine the auction system if allowed to be exported directly)  The coffee sector regulatory system to provide an institutional guide on coffee standards. The guide can be in the form of information on existing standards, market outlet and certification processes