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Africa Region Working Paper Series No. 56 Tanzania’s
Coffee Sector: Abstract Coffee, Tanzania’s largest export crop, contributes about $115 to the country’s export earnings. About 95 percent of coffee is produced by some 400,000 smallholders on average plots of 1-2 hectares. Most do not use purchased inputs such as chemicals and fertilizer. Before 1990 all coffee marketing (including input provision, transportation, and processing) was handled by the state coffee board and the coop-erative unions. Modest reforms were imple-mented in 1990 affecting inputs, price an-nouncements, and retention of dollar export earnings. More comprehensive reforms were in-troduced beginning in 1994/95, allowing private traders to purchase coffee directly from growers and process it in their own factories for the first time in more than 30 years. While producers’ share of export prices increased, official statistics show no supply response. Coffee processing ca-pacity, marketing efficiency, and investment in new plantings increased. Several issues remain to be
addressed. Taxes should be consolidated, lowered, and rational-ized across
all export crops and other exports and the tax code should be simplified.
Licensing procedures need to be reexamined. Licenses should be suspended
only in accordance with the Coffee Industry Act of 2001, and not in re-sponse
to requests by the cooperative unions or the Ministry of Cooperatives.
The coffee auction should be voluntary, substantially reducing the costs
of vertically integrated exporters and en-hancing cross-border trade.
The Tanzanian Cof-fee Board should be responsible for disseminat-ing price
and other information and for monitor-ing the quality of auction coffee
sales and other coffee statistics. The power of the board and the ministry
ought to be substantially reduced and their respective roles clearly defined.
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