Meeting Tanzania’s Southern Highlands smallholder coffee farmers
Located in the East African Rift in Southern Tanzania, Mbeya city and its sprawling suburbs cover a hilly valley between gigantic mountain ranges. The city serves as a regional hub due to its geographical location connecting Tanzania with Malawi, Zambia and the Democratic Republic of Congo. A never-ending trail of heavily loaded lorries passes the city to transport copper and other minerals from the Zambian Copperbelt and DRC’s mines to the seaport in Dar es Salaam, and necessary commodities from the port to the landlocked countries. Nonetheless, during my visit, I only took a cursory glance at the busy city before I turned to the rural countryside of the region. Blessed with unique topographical characteristics thanks to its high altitude Mbeya and the surrounding region is also a cultivation area for high-quality Arabica coffee. The purpose of my visit was to get to know the circumstances under which coffee is grown, harvested and sold. In particular, I investigated the activities of the farmers and how they manage their businesses from a financial perspective.
In Mbeya and surroundings, mostly smallholder coffee farmers grow the valuable crop on their modest farming plots and sell their harvest to local coffee mills, which process the produce for picky clients abroad. Weakest in the coffee value chain, the smallholder farmers are the ones who suffer most from heavy coffee price fluctuation and climate change deterioration. At this point Hanns R. Neumann Stiftung (HRNS) steps in to support farmers by improving agricultural techniques to increase yields, promoting resilient crop varieties, and ameliorating the quality of their produce. First and foremost, HRNS supports erecting cooperative structures which enable farmers to sell their coffee directly to the national coffee auction, thereby bolstering their role in the coffee value chain and fetching a higher price.
During my two-weeks visit to Mbeya, I got the opportunity to join many different meetings of these producer organizations. Farmers become more self-determined and are the ones taking over decision making. This form of self-support was extended by so called internal savings whereby farmer groups save on a regular basis which helps them making larger future investments, such as buying inputs for coffee growing or acquiring new plots of land. Furthermore, the group can provide small loans to its members to overcome times of cash constraints, pay for school fees or attend medical care. Based on the ability to save as a group I could witness that access to formal and semiformal loans improves and member become more financially apt. As Amani Fungo, HRNS team leader for organizational development puts it: “Farmer organizations are a first step to empower smallholders. Accessing financial products creates an additional gain for many since they can start to independently develop their businesses.”
However, many challenges with regard to financial access in remote areas persist. Financial institutions and input providers complain about their inability to monitor the use of proceeds from loans, lack of sellable collateral even if official land titles are available and persistent farmers’ misunderstandings of the characteristics of loans. Against this background HRNS will conduct a study on farmers’ individual and group based financial decision making. The overall question which needs to be answered is how to create financial services that suit the needs of smallholder coffee farmers, taking into account their individual preferences, views, and expectations. In the end, farmers’ ability to invest in their own business needs to be bolstered in order to escape poverty and be able to better respond to the various risks associated with the agricultural sector.
All in all, I learned a lot about what makes a farming business run and which obstacles need to be leaped to strive forward. In fact, I was most impressed by the future plans and dedication of many smallholders for farming and how they search for opportunities to gradually improve their businesses.