Farmers’ coping strategies with the changes of coffee marketing system after economic liberalisation: the case of Mbinga District, Tanzania
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Date
2005
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Publisher
Kyoto University
Abstract
Mbinga District is well known as one of the major coffee producing areas in Tanzania. The
inhabitants of the district known as the Matengo, combine ngolo cultivation to produce food crops
and also engage in coffee cultivation for income. In 1986, the Tanzanian government introduced an
Economic Recovery Programme that liberalized coffee marketing in 1993. In 2002, the government
introduced a single licensing system in the coffee industry to stimulate competition among buyers
and improve income for farmers. At the same time, the global coffee market witnessed
improvement in production and processing technology, and the entry of new coffee producing
countries. These resulted in global overproduction that decreased prices of coffee to unprecedented
levels. A coffee industry that supported the national economy of Tanzania for many years was
ushered into a period of transformation and uncertainty. This thesis documents and examines the
trend in policy evolution and the effects these have had on the practice of stakeholders in Mbinga
District. The nature of the rural economy is evaluated under the previously state controlled
marketing system. The farmers’ responses and coping strategies during the period of economic
liberalization are then analysed and discussed.
Chapter 1 describes the historical transition of policies from African Socialism to economic
liberalization and the tendency of diversification of rural livelihoods after which the objectives of
this study are stated. In Chapter 2, an outline of the livelihoods is described and coffee cultivation is
contextualized with the farming system. Chapter 3 compares changes in coffee marketing policies
before and after economic liberalization, and sequences the characteristics in a historical
perspective. In chapters 4 to 6 the case study of Mbinga District is documented, analysed and
presented. Chapter 4 outlines the roles of and changes in the Mbinga Cooperative Union (MBICU),
Private Coffee Buyers (PCBs), and Primary Societies (AMCOS), and analyses the marketing
system. In Chapter 5 describes the current situation and problems of the coffee industry in Mbinga,
the fluctuation of coffee prices and cost of agricultural inputs, and the strategies employed by
stakeholders to cope. Prior to economic liberalization, MBICU facilitated coffee farming by
providing credit, affordable inputs and marketing. After economic liberalization, MBICU could not
obtain loans from commercial banks to continue supporting coffee cultivation because it did not
service loans that were previously provided. Moreover, its capacity was rapidly weakened due to
competition from the PCBs and it subsequently collapsed in 1996. The PCBs filled the gap left by
MBICU. However, the PCBs did not provide services to coffee farmers similar to that provided by
MBICU. They did not avail agricultural inputs and credits to fanners. The fanners, who previously
depended on MBICU for the provision of affordable inputs, faced severe economic difficulties as
production costs increased. The farmers were dissatisfied by the purchasing system adopted by the PCBs. The price of chemical fertilizers began to increase after 1996, while the market price of
coffee decreased rapidly. In 2002, when a single license system was introduced, AMCOS started to
purchase coffee and established a payment system where part of the farmer’s income was paid in
form of input purchase vouchers. This system assisted the farmers to obtain inputs thereby
contributing to solve the problem of inputs.
Chapter 6 examines farmers’ coping strategies in response to policy changes by analysing
the results of field research conducted in the villages. The transformation of both the rural economy
and the fanning system are described. Although many farmers who marketed coffee through the
AMCOS appreciated the voucher system, they preferred selling coffee to the PCBs to the AMCOS.
As such PCBs bought more coffee than AMCOS. This indicates that the farmer’s recognized the
importance of management of expenditures based on their previous experiences with market
economy, which greatly changed the structure of the rural economy. Consequently, coffee revenue,
which was once invested in business, is currently invested in other activities to generate income and
this assists the farmers to reduce the risks.
When the global market prices stagnated, the government encouraged the purchase of
coffee according to each grade a situation that motivated the farmers to produce high-quality coffee
in a bid to increase income. The farmer’s organized themselves into groups that trained farmers to
produce high quality coffee and identify appropriate marketing outlets. Introducing improved
varieties and obtaining appropriate technology enhanced coffee quality. Selecting the most cost
effective market for each grade maximized income. Networks and linkages among farmers’ groups
became well established. The strategy of producing high quality coffee and identifying the most
cost effective buyers spread fast among farmers in Mbinga District.
An evaluation of the farmers’ coping strategies after economic liberalization revealed a structural
transformation of the rural economy. The farmers tried various strategies to cope with policy
changes within the context of their natural and social environment while making the best use of
their experiences with the market economy. However, oversupply keeps prices stagnant while the
prices of inputs keep rising. The sustainability of coffee cultivation in Mbinga will depend on
constant supply of inexpensive inputs. It is presumed that formation of a cooperative union that
pursues profit and values transparency while facilitating coffee farming, AMCOS and farmers’
groups would play a key role. It can be concluded that ten years of economic liberalization detached
farmer’s from a state subsidized system to one of economic self-reliance that modified the structure
of the rural economy.
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Keywords
Farmers’ coping strategies, Coffee marketing system, Economic liberalisation, Mbinga District, Tanzania