Coffee farmers to lose out?


Zimbabwe is likely to lose out on a new coffee agreement arranged by Latin American and African farmers recently to by-pass existing middlemen and make supplies direct to international markets thereby almost doubling revenue from the crop sales.

While the current market rates are about 80 US cents (about $4.00) a pound, the deal sealed by the farmers under what is called the Small Scale Farmers’ Cooperative Society envisages returns of between US$1.20 and US$1.50 (about $6.00 to $7.50).

The farmers will collaborate with “fair trading organisations” most of which are already involved in promoting sales of products from the Third World. These include Oxfam Trading, Equal Exchange, Trade Craft and Twin Trading.

While being hailed as a good arrangement problems could emanate from the governments where these farmers are based as in most cases they have created complex marketing arrangements through parastatals which are difficult to abandon as this would involve huge capital losses as well as losses of jobs for hundreds of people as most of them are always overstaffed.

Parastatal bosses, who are usually political appointees, may also strongly oppose the new arrangements as it will deprive them of the source of money from which they can dip their hand from time to time to finance their own projects.

The direct sales could also cause problems where farmers have been given loans to obtain inputs like fertiliser, seed and pesticides as there will be no mechanism to ensure they pay back the government.

Coffee in Zimbabwe is a controlled crop and its marketing therefore is the responsibility of the Grain Marketing Board which at the moment is overburdened by the problem of trying to source enough maize for the nation.

Coffee farmers are therefore likely to lose out on this deal which would have boosted their earnings from the meagre production this year as the price is almost double what they get under the present system.

The new arrangement would also give the farmers easy access to inputs as it will be easier for them to obtain foreign currency under the present export retention scheme since their earnings will be paid directly to them without the GMB taking a cut for doing nothing but selling off the product at a cheaper price.


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Charles Rukuni
The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.


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