• Main question/s addressed​
How do the two case study areas differ in respect of the
  • organization of value chains?
  • position of smallholder farmers in chains?
  • access to local, national, regional and international markets?
  • impacts of different value chain arrangements on farm incomes
What can we learn from these differences and what are the implications for trade regimes and policy?
  • Short description​
The short description of the two regions shows why it is crucial to understand the connections with and the dynamics and intricacies of global value chains. Local markets are also characterized by new consumer demands due to changing lifestyles and increased knowledge. Related to domestic markets, the study seeks to comprehend the role of each actor in the coffee chain to ensure equal benefits to all, and consequently to support smallholder farmers in getting out of poverty.
  • Key governance / legal / institutional frameworks that play a role
Thematic focus is the opportunities local, national, regional and international markets provide for commercialization, VCs and primary processing of coffee and the impact different strategies could have on poverty reduction. Efforts to alleviate poverty should focus on, among other things, trade and participation of smallholder farmers in value chains and access to (international) markets.
Co-operative models are believed to play a key role in providing smallholder farmers access to markets and obtain higher prices. Co-operatives can improve market participation of smallholder farmers, increase farm incomes and reduce rural poverty. To do so, co-operatives need to be both, inclusive – i.e. poorer farmers need to be able to participate – and effective – i.e. creating an impact on farmers’ income and wellbeing. Cooperatives are often associated with collective action and social capital, and are therefore often thought to be more inclusive than other types of institutional innovations such as contract farming.
Value chain development aims to create more mutually beneficial linkages between smallholder farmers and other chain actors. However, the extent to which different arrangements actually help smallholder farmers to get out of poverty remains an open question. Cooperatives can play a key role in linking poor smallholder farmers with value chains. However, their position tends to remain weak, even within cooperatives. Power is concentrated among one or few chain participants that coordinate market activity and the ability of smallholder farmers to take the lead tends to be limited.
  • Key policy frameworks that play a role
Improving the productivity and trade relations, among actors involved is argued to be the main pathway out of rural poverty. Moreover, the focus among donor organizations has been to increase the participation of smallholder farmers in high-value global value chains.
  • Issues related to competitiveness in markets that will be explored​
For the Tanzanian part it is possible to obtain a better price for the fair trade coffee exported to Japan.
  • Planned methodological approach​
The study will employ mixed method approach that combines the use of both quantitative and qualitative techniques in the collection and analysis of data. A mapping of coffee value chains in both regions focuses on the institutional context highlighting the actors and stakeholders and their relationships to one another; the context within which they can cooperate; their incentives and disincentives, norms of interaction and market factors. The value chain mapping and related analysis of marketing margins will provide deeper insights. Qualitatively data will be analyzed using thematic analysis while quantitative data will be analyzed using descriptive statistical correlation and regression analysis.  The analysis of data will combine both deductive and inductive strategies.
  • Planned data collection​
The mixed method approach envisaged will combine semi-structured interviews with a small number of respondents with a larger scale survey. The basis for the mapping will be interviews with key experts and 1 workshop in each of the two regions. Both primary and secondary qualitative and quantitative data will be collected. Quantitative data will be collected using small holder farmer survey. Qualitative data will be collected using Key informant interviews (KII) and Focus group discussion (FDGs). A total of four (4) KII, one for each of the value chain actor described above will be conducted. Furthermore, three (3) FDGs one for men, for women and youth will be carried out). Secondary data will involve data from Tanzania Coffee board, Ministry of Industry and Trade and Agriculture The secondary data will mainly be trade data in terms of quantities, prices, market channels and other value chain dynamics. In Uganda, secondary data will involve data from Uganda Bureau of Statistics (UBOS), Uganda Coffee Development Authority (UCDA) and Food and Agriculture Organization (FAO). The secondary data will mainly be trade data in terms of quantities, prices, market channels and other value chain dynamics. In Tanzania, special attention will be paid to the competencies of chain actors to accelerate integration, increase production, add value and promote marketing of coffee and ultimately poverty reduction, abilities to provide financial services (instruments) to facilitate investment in agro-industries. In Uganda, key person interviews will be focusing on smallholder farmers’ marketing strategies, market shocks and challenges experienced, and existing opportunities and barriers in international trade. Evaluation of margins at different stages as well as a SWOT analysis of the entire value chain to determine entry points and missing unexploited opportunities for the actors.
  • Expected impact
The results can support the formulation of better trade policies, thereby enhancing smallholder farmer’s access to international markets. The case study will also shed light on value chain champions such as credible suppliers of inputs and processors who can ally other actors within the coffee value chains to adopt specific best practices that are required to enhance production efficiency and products’ quality and safety better price, environmental sustainability and poverty reduction. For the Tanzanian part the case study will also identify feasible options for value chain upgrading and integration through analysis of the structure, actors and dynamics of value chains. This is crucial in formulating policies that would assist farmers to engage commercial production and get out of poverty. Furthermore, this study will provide a better understanding of the effectiveness of measures that promote and accelerate better interaction among VCA and are thus able to compete effectively in the globalized market.

Case Study Leader

University of Helsinki,
Department of Economics and Management
John Sumelius
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Local Partner(s)

Moshi Co-operative University
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Makerere University
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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 are involved in Tanzania coffee value chain, these perform different roles which complement 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 is envisaged to have high level interactions with several stakeholders in the value chain, due to the different roles they perform in ensuring production and value addition, and ensuring conformity to international standards, such as EU standards on commodities emanating from developing countries. The key stakeholders include 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.