Coffee accounts for about 20% of Tanzania’s foreign exchange earnings and has been the mainstay of the country’s agriculture-based economy since its introduction as a cash crop around 100 years ago. More than 450,000 farm families (95%) and 110 estates (5%) derive their livelihoods from growing coffee with an estimated 2,000,000 additional people employed being directly or indirectly in the industry. Coffee production is concentrated in five main geographic areas of Tanzania, in the north (Kilimanjaro, Arusha & Tarime), in the west (Kigoma & Kagera) and south (Mbeya, Songwe, Iringa, Njombe and Ruvuma).
Since the mid-1990s, the country’s coffee industry has been in a state of stagnation or decline. The reasons for this are diverse. Falling world coffee prices have eroded profit margins and income of coffee growers, threatening livelihoods. Productivity is low because of lack of motivation to invest in inputs and improved crop husbandry, which in turn has affected quality and yields. Costs of production are high, thus further reducing competitiveness in the world market. Coffee trees as well as coffee growers are aging, and research, so essential for supporting a vibrant coffee industry, had been moribund for many years.
However, despite this situation, Tanzania is very well suited to coffee production (and in particular the production of less price-sensitive Arabica coffee) because of its expansive volcanic highland areas and the Great Lakes basin which provide ideal conditions for growing coffee. There is great potential for developing the Industry. See Tanzania Coffee Baseline Report 2005.