- Main question/s addressed
- To analyse domestic government measures and international standard regimes and practices that have a bearing on reducing poverty among coffee smallholder farmers in Uganda and Tanzania.
- To evaluate the adoption of fair-trade and consideration of human rights perspective in Uganda’s and Tanzania’s coffee value chain and strategies to attain SDG1, 2, 3, 5 and 13.
- To assess the profitability of coffee value chain and its effects on smallholder income and poverty reduction in Uganda and Tanzania.
- To examine the role of transparency of coffee value chain actors in agri-food chains in Uganda.
- Short description of key findings
- The national and supranational legal and policy frameworks, including several EU regulations, most of which aim at achieving SDGs in one way or another, are also too complicated and complex to the extent that they have failed to create conducive environment for smallholder farmers to realize better returns in Tanzania.
- Tanzania has implemented various domestic and international measures to alleviate poverty among coffee smallholder farmers, such as the coffee industry stabilization fund, support for cooperative institutions, and fostering public-private partnerships. These, together with the complex nature of the international coffee trade standards and marketing practices and procedures have largely alienated the smallholder farmers from the potential benefits of the international coffee market.
- In Uganda government supports the coffee sub-sector on several fronts of research and development, input distribution, specific extension services, information generation and dissemination, policy formulation and implementation. Coffee production is dominated by smallholder farmers, while private institutions are the leading actors in coffee transportation, processing and trade. However, inadequate investment in development of the quality control infrastructure typical of bureaucratic inspection and certification processes; coupled with delays in adoption of evolving export grades for the expanding specialty coffee markets continue to obstruct the growth of Uganda’s coffee export business.
- Uganda’s traditional coffee production generally aligns with most of the Fair-trade principles. However, low popularization on how the Fair trade scheme works especially to the benefit of smallholder farmers as well as its renowned long certification process continues to curtail adoption of related practices. As a result, actors along the coffee value chain continue to miss the actual and potential benefits of improving own livelihoods.
- Key governance / legal / institutional frameworks that play a role
The national and supranational legal and policy frameworks, including several EU regulations, most of which aim at achieving SDGs in one way or another, are also too complicated and complex to the extent that they have failed to create conducive environment for smallholder farmers to realize better returns, particularly in Tanzania. Tanzania has implemented various domestic and international measures to alleviate poverty among coffee smallholder farmers, such as the coffee industry stabilization fund, support for cooperative institutions, and fostering public-private partnerships. These, together with the complex nature of the international coffee trade standards and marketing practices and procedures have largely alienated the smallholder farmers from the potential benefits of the international coffee market.
In Uganda misinterpretation of the National Coffee Act (2021) clauses to the public especially smallholder farmers in addition to absence of regulations to implement the Act dwindles and dawdles the adoption of policy measures earlier intended to maintain and increase the country’s market share in the European market and other international markets.
- Key policy frameworks that play a role
In Tanzania Fair trade programs frequently rest on a lack of understanding of production realities thus resulting in a gap between the countries that produce and those that consume. Lack of transparency and information asymmetry are some of the factors inhibiting the realization of the benefits of fair-trade programs by smallholder farmers and hence they gain limited consideration for human rights at the lower end of the coffee value chain. They also fail to enjoy the benefits of digitization in a modern world.
Uganda’s traditional coffee production generally aligns with most of the Fair-trade principles. However, low popularization on how the Fair trade scheme works especially to the benefit of smallholder farmers as well as its renowned long certification process continues to curtail adoption of related practices. As a result, actors along the coffee value chain continue to miss the actual and potential benefits of improving own livelihoods.
- Issues related to competitiveness in markets that have been explored
Despite the invaluable support from the Uganda Coffee Development Authority (UCDA) to generate and disseminate information, transparency on pricing is still limited due to a high involvement of profit-oriented actors who act in their own interests amidst the weak farmer governance structures and low levels of digitization. The rampant incidences of information asymmetry continue to deprive coffee smallholder farmers of the actual economic value of participating in value chain activities.
In Tanzania the coffee value chain is complex because some of the participants participate in more than one group thus enjoying better relative advantage in the chain. There is a lack of integration and synergy among actors in the coffee value chain that would allow all actors to participate in decision-making. Small-scale farmers are the least privileged since they are passive actors in major decision making.
- Methodological approach used
In Uganda and Tanzania the study carried out in-depth discussions with officials from various authorities, NGOs, input dealers, coffee extension agents, exporters, aggregators, processors and coffee shops as key in-formants. Several focus group discussions with coffee smallholder farmers were organised. In the Tanzanian case yhe following methods were used
- Focus group discussions
- Key informants’ interviews
- Secondary data review and analysis
- Content analysis
- Gross margin analysis
- Value chain mapping
- Data collected
In Uganda a nationally representative panel dataset from Uganda National Panel Surveys (UNPS) 2010/11, 2015/16 and 2019/20 was utilized. In Tanzania a survey of 150 coffee farmers in 4 different districts in two different regions was carried out.
- Impacts achieved and expected from this case study
Recommendations for Uganda:
- Invest in developing quality assurance infrastructure at regional level with unified and transparent processes of inspection and certification to reduce the turnaround duration and ease acquisition procedure of licenses, permits and clearance for coffee exports.
- Besides branding Ugandan coffee for both the domestic and international markets, develop a fully-fledged market research department to take advantage of the expanding demand for Ugandan coffee through timely adaptation of the ever-evolving export grades in respect to changing consumer tastes and preferences for specialty coffee brands.
- Build advocacy and sensitization campaigns to create public awareness about the National Coffee Act (2021) and its clauses. This will stimulate stakeholder compliance for Uganda, to generate the associated economic value and sustainably achieve social and environmental aspects of the coffee sub sector.
- Harness UCDA’s efforts and arouse the interest of private sector investment such as the national telecom networks into the last mile digitization process of the coffee value chain to bridge the digital dive and increase information transparency through improved transmission of production and market related information. Besides, adoption and use of digital technologies by value chain actors has potential to improve access to another important resource – finance, especially with attraction of financial institutions in the coffee sub sector.
- Provide a supportive environment to strengthen farmer institutions and governance mechanisms not only for adoption of quality and sustainable production practices as demanded by farmer benefiting international schemes such as Fair-trade but also an opportunity to advance and participate at the successive levels of the value chain for increased supply of value-added coffees.
- Support commercialization of coffee farming beyond seed distribution to increasing ease of access to mechanization inputs and technologies that improve advantages of production scale economies including higher returns and reduced poverty, hence better livelihoods.
Recommendations for Tanzania:
- While cooperatives are deeply rooted in the rural areas, reviving and empowering of these farmer organizations by making them stick to their values and principles is very crucial for the industry. Public and private partnership should be established by the local government to enable farmers access to improved inputs to unlock greater potentials from coffee production.
- After eliminating coffee stabilization funds, the government should implement tailored risk management programs for smallholder farmers. Introduce insurance schemes to offset production, marketing, and price volatility risks. Government subsidies can make premiums affordable, encouraging farmer participation. These schemes provide crucial safety nets, covering crop failure and market fluctuations. Capacity-building initiatives should accompany these programs, educating farmers on risk mitigation strategies. By supporting these measures, governments can enhance agricultural resilience and ensure the welfare of smallholder farmers amidst economic liberalization.
- To uplift smallholder farmers in the coffee value chain, strengthen Agricultural Marketing Co-operatives (AMCOS) through capacity building in governance and market intelligence. Promote value-adding activities and advocate for policy reforms favoring cooperatives’ sustainability. Emphasize AMCOS’ advocacy role to ensure farmers’ interests reach decision-makers, reducing reliance on Tanzania Federation of Co-operatives (TFC). By improving internal governance and market acumen, AMCOS can adapt to market dynamics and capture emerging opportunities. With increased collaboration and strategic advocacy, AMCOS can better represent farmers’ interests, contributing to improved livelihoods and sustainable agricultural development.
- To alleviate poverty among smallholder farmers in the Tanzanian coffee industry, it is imperative to provide adequate financial support to the Tanzania Coffee Board (TCB) to enhance its regulatory capacity and enforcement mechanisms. Additionally, investing in capacity building for TCB staff, fostering partnerships, advocating for policy reforms, exploring innovative financing mechanisms, and implementing robust monitoring and evaluation systems are essential.
- To uphold fair trade principles while acknowledging the prevalent use of unpaid family labor among smallholder farmers by recognizing family labour within fair trade certification, ensuring transparent pricing that accounts for labour inputs, educating farmers on fair trade principles and negotiation skills, advocating for supportive policies to protect labour rights and incorporating fair treatment of family labour into certification requirements. By implementing these measures, smallholder farmers can honour fair trade principles, value family labour, and advocate for fair compensation, contributing to sustainable livelihoods and social justice in agricultural communities.
- The government need to revise and operationalise its coffee related policies so that they become more relevant to address the constraints affecting effective and profitable participation of smallholder farmers in the coffee value chain.
- Synergy and integration need to be enhanced among the various levels of the value chain actors for transformative and inclusive action to enhance a win-win situation for all actors.
- The government and other actors should jointly create smallholder farmer’ awareness about available agribusiness based digital services and improve physical infrastructure development for digital access and lower costs associated with access to the internet and digital devices to enhance smallholder farmers inclusion into the digital agricultural world.
Coffee indicative price in Tanzania for coffee producers was almost doubled, to 10,000 TZS shilling by the Tanzanian Coffee Board
- Further case-study related documents and videos
Case Study Leader
University of Helsinki,
Department of Economics and Management
Local Partner(s)
Moshi Co-operative University
Makerere University
SDG's Addressed
Geographical Focus and Scale
Uganda 
Tanzania
The case study focusses on two coffee producing regions, the Mruwia in Tanzania in Moshi Kilimanjaro region and central region in Uganda. The planned analysis is to compare the effects of coffee trade in local, national, regional and international markets. Focus is on the primary processing and commercialization of coffee in the two regions, and impact on poverty reduction.
Product and market focus
The target product is coffee since this is an important export product in both countries (about 5% of Tanzania’s total exports by value, and 22% of Uganda’s) The markets examined are local, national, regional and international. Most of coffee that is produced in Tanzania is exported and local consumption is estimated at only 7% of the overall production (TCB, 2021). Coffee provides income to about 400,000 smallholder farmers who produce 90% of per-cent of Tanzania coffee. This benefits indirectly the livelihoods of 2.4 million Tanzanians through marketing and value addition. In Uganda, coffee is the country’s principal cash crop since the 1980s, generating export sales of about US$400 million in 2013.
The EU accounts for over 60% of total shipments of Uganda’s coffee. Sudan, India, Algeria, and USA are the other importers. Exports to Africa comprise about 30%. Most poor people in Tanzania and Uganda live in rural areas and depend on underdeveloped agriculture as source of their livelihood.
As most of what is produced is exported, the major exporters are affiliated with the multinational corporations which sell coffee to roasters in consuming countries. Prices in these markets are usually set in reference to New York market for Arabica coffee and London futures market for Robusta coffee.
Key stakeholders
Several stakeholders were involved in Tanzania coffee value chain which had different roles which complemented each other:
- Ministry of Agriculture as it vested the regulatory powers of all crops;
- Tanzania Coffee Board as it performs the regulatory function by supervising the coffee license holders and reprimands for non-compliance actions,
- G32 a group of primary societies in the Kilimanjaro area that exports coffee directly to Japan and not through the union,
- Ministry of Industry and Trade which is responsible for coordinating all matter relating to investment, industries and trade,
- farmers, assemblers, exporters, and processors.
In Uganda the study had a high level of interactions with several stakeholders in the value chain, including those engaged in production, value addition, and those ensuring conformity to international standards, such as EU standards on commodities emanating from developing countries. The key stakeholders included regulatory and governance bodies:
- Uganda Coffee Development Authority,
- Uganda Investment Authority,
- Ministry of Trade, Industry,
- Ministry of Agriculture, Animal Industries and Fisheries,
- farmers, assemblers, exporters, and processors.