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Front Page Small scale coffee farmers benefit in new ‘auction deal’By our correspondent The Association of Kilimanjaro Specialty Coffee Growers (AKSCG) has assisted its 62 smallholder-group members to achieve a record US$1,050,000 in sales for the 2003/04 season, during the national coffee auction held recently in Moshi. This is according to TechnoServe/Tanzania, a non-profit organization that works with AKSCG and its members to improve coffee production and marketing and help them earn higher prices. AKSCG is shaking up Tanzania's coffee market with the competitive prices it is negotiating for its 4,500 smallholder grower-members. In the three coffee-growing areas where AKSCG operates -- Kilimanjaro, Mbeya and Mbinga -- the Association has consistently obtained higher prices for its farmers' coffee than other sellers. In Mbinga, for example, AKSCG farmers received between 61 and 83 cents (US) per kilogram of parchment coffee, while other coffee farmers received between 39 and 49 cents (US). For the second year in a row, the prices AKSCG has obtained represent over 65% premiums above the average price paid in Mbinga, with some farmers receiving much higher premiums. In Mbeya, AKSCG members earned between 68 and 88 cents (US) per kilogram, while other coffee farmers received between 39 and 83 cents (US). This week, in a related development, Peet's Coffee & Tea (NASDAQ: PEET), a specialty coffee roaster with an international reputation for offering the highest quality coffees, is purchasing 176 bags (23,280 pounds) of washed Arabica from five AKSCG member-groups representing 645 smallholder growers in northern Tanzania. Peet's purchase of AKSCG coffee represents the first direct coffee smallholder grower-to-roaster transaction in Tanzania. The premium price paid by Peet's will result in farmers receiving 50% higher prices than AKSCG member-farmers who sell their coffee at auction. In comparison with non-AKSCG farmers, the farmers selling to Peet's will receive up to 100% higher prices than their neighbors. [*One bag equals 60 kilograms or 132.28 pounds.] The coffee that Peet's is purchasing was processed in "central pulperies" that TechnoServe helped to establish between 2002 and 2003 in the villages of Dohom, King'ori, Messe Ngarony and Mlimani Ngarashi. These central pulperies are processing facilities where farmers collectively remove the coffee cherry skin, wash and then dry their coffee, resulting in a higher-quality and more consistent end product. TechnoServe/Tanzania facilitated the direct sale of AKSCG coffee. "After meeting with TechnoServe's staff and coffee clients in Tanzania last summer, I was very happy to sample and purchase one of the finest lots of coffee from this region, which met Peet's high standards for great acidity, body and flavor," said Jim Reynolds, Vice President of Coffee, Peet's Coffee & Tea. "It's especially gratifying because over the years, Jerry Baldwin, Peet's former chairman, and also a TechnoServe Board member, has encouraged the coffee producers in Tanzania in their pursuit of quality, and we are beginning to see great progress from them. For the first time in Tanzania, growers of high-quality coffee can bypass the national auction system and sell directly to specialty buyers, a result of changes to industry regulations enacted in October 2003 by the Tanzania Coffee Board (TCB). TechnoServe, AKSCG and other key stakeholders pushed hard for the changes, which are designed to help Tanzanian specialty coffee growers receive premium prices in direct negotiations with roasters. "The coffee that Peet's is purchasing was grown by farmer groups who are working at the highest altitudes, at a minimum of 1,500 meters, and who are operating central pulperies that were installed with the support of TechnoServe," said Thom Dixon, TechnoServe/Tanzania Country Director. Following a decade-long decline in Tanzania's coffee industry -- made worse by the current global coffee crisis of near-record-low prices being paid to growers -- the vast majority of Tanzania's 400,000 smallholder growers are trapped in a vicious cycle of ever-worsening production and quality. TechnoServe has already established 11 of the village-based central pulperies, which are enabling over 1,000 Tanzanian farmers to produce consistently high-quality coffee and receive premium prices, and hopes to establish 20 more central pulperies over the next two years. TechnoServe's coffee work in Tanzania is funded by the U.S. Agency for International Development (USAID), the Swiss Organization for Development Cooperation (SDC), and private donors to TechnoServe.
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