Coffee auctions begin after shake-up

Delayed for several months by a new Coffee Act, Tanzania's complicated system of coffee auctions has begun for the 2002 season. The Act was rewritten to try and improve prices for the producers, and the Tanzania Coffee Board (TCB) says the revamped system will now allow for competitive auctioneering and, therefore, increased income for growers. However, there are concerns that it might also make life difficult for specialist coffee growers and increase risks in an already volatile market. The changes come at a time when Oxfam, the international relief agency, is reporting that some 25 million coffee farmers around the world face ruin due to collapsing prices and a glut of low quality beans. "The aim of this new system is to improve prices through fair competition, and it seems to have worked as prices have gone up by almost US $10," claims Deseri Mboya, Chief Auctioneer and Acting Director of Marketing at the TCB. "The producers have been toiling for years, without getting the benefits. It is now time for the consumers to help out," he added. Mboya said the old system - whereby exporting companies would come to auctions with coffee they had already bought in the fields and then merely buy it back off themselves - had to be changed, as it did not allow for proper competition. "In the past, coffee companies would go to buying posts in the villages and buy coffee directly from the producers, and the auctions were merely a way for the government to collect the tax from the produce," explains an analyst. "At the auctions, companies would just buy back their own coffee and the tax would be paid." However, the new system aims to stop companies from buying back their own, pre-bought coffee. Instead, they will use the samples that are sent to them two weeks before the auctions to determine which lots they want to buy, Mboya added. Nonetheless, a fear shared by several buyers is that the new system allows for too much flexibility and risk over what they are actually buying. "At the auction, you are now only told the grade of the coffee and the region that it came from. For a lot of the buyers, this is not enough as, much like wine, there is a lot of marketing and branding that goes into the specific origin of the coffee, particularly in the specialised markets," said one buyer. There are also concerns that there is no longer any added value for farms that work to get recognition for environmentally friendly or fair trade practices as individual farms will not be identified at the auctions. "I can't really see this change benefiting the small holders, who produce 90 percent of the coffee in Tanzania," a coffee farmer said. "Other than the complete lack of a control mechanism on the global market, the problem here stems from the collapse of the cooperatives and central pulperies." "These organs used to help small-scale farmers in the long, drawn out process from harvesting to being paid, but now most are forced to produce the coffee inefficiently, in their own backyard," he added.