Alternative models of assistance for Tanzanian coffee smallholders

Smallholders are vulnerable to changes in commodity prices. Fair trade supporters suggest helping them by using consumer demand to restructure global trading relationships. Free trade approaches emphasise liberalising markets and increasing competition and smallholder efficiency. Tanzania’s coffee industry provides a test case of their respective strengths.

Coffee is a major contributor to Tanzania’s economy and provides support to half a million families. Tanzanian coffee growers have struggled to adapt to rapid market liberalisation, volatile and declining world prices, higher input costs and financial vulnerability of cooperative unions. Diminishing coffee quality is a major concern.

Research from the University of Leeds, UK and the State University of New York, USA, compares two distinct market interventions in the Tanzanian coffee industry: the Kilimanjaro Native Cooperative Union’s participation in the certification programme of the German-based Fairtrade Labelling Organizations International (FLO) and the Association of Kilimanjaro Specialty Coffee Growers partnership with TechnoServe, a USA business development organisation.

The interventions discussed use different strategies in pursuit of the same goal: reducing the vulnerability of smallholders supplying the coffee market. TechnoServe’s strategy is to move Tanzania out of the lower quality blended market by assisting farmers to produce high-quality coffee and then to identify new, better-paying customers. FLO works with established cooperatives, which any farmer in a particular area can join, while TechnoServe promotes business groups, who impose conditions on members and are

able to manage member behviour.

Key findings include:

• TechnoServe has been more successful in ensuring that financial benefits flow into the pockets of farmers.
• While FLO’s skills programmes have been limited in scope and failed to address industry constraints, TechnoServe’s training has given farmers useful new skills.
• FLO has connected smallholder organisations to the global market but has been less effective in bringing about structural changes to benefit farmers.
• Though successful in influencing national level policies, TechnoServe has yet to demonstrate that it can extend market opportunities beyond established relationships.
• FLO is cautious about chemical pesticides but TechnoServe argues that they may be the only way to control diseases.

The authors suggest:

• Fair trade and free trade are not necessarily contradictory approaches to smallholder development.
• Conditions requiring increased efficiency of production are served by TechnoServe’s approach, while conditions requiring increased consumer demand are well-suited to a FLO-style approach.
• It is important to support strong organisations that motivate members to contribute and allow them to hold leaders responsible for their actions.
• FLO should reconsider its new policy of charging participating farmers initial and annual certification fees: this is likely to have a negative impact, both in the benefits to farmers and in the marketability of the Fairtrade mark.

Source(s):
‘What Tanzania’s coffee farmers can teach the world: a performance-based look at the fair trade-free trade debate’, Leeds University and State University of New York, Sustainable Development, vol 13, issue 3, pp 154-165, by Bradley D. Parrish, Valerie A. Luzadis and William R. Bentley, June 2005

id21 Research Highlight: 20 January 2006

Further Information:
Bradley D. Parrish
School of Earth and Environment
University of Leeds
Leeds LS2 9JT
UK

Tel: +44 (0) 113 3436461
Fax: +44 (0) 113 3436716
Contact the contributor: bradley@env.leeds.ac.uk

University of Leeds

Other related links:
'Fair shares for all: ethical trading'

'Comprehensive reforms needed for Tanzanian coffee'

'Counting the cost of a cup of coffee'

'Who gains when global coffee prices collapse?'

TechnoServe Business Solutions to Rural Poverty

Fairtrade, UK

Fairtrade Labelling Organizations International