1
Executive Summary
Project Objective
12,000 coffee farmers in southern Tanzania representing with their families about 60,000 people
in total have improved the production systems within 5 years in order to exceed the poverty line of
USD 1.0 per person per day in a sustainable way.
Main activities of project in past year
Establishment and consolidation of farmer groups, i.e. Depot Committees (DCs) and
Producer Organizations (PO).
Continuous backstopping and strengthening of farmer organizations through service
linkages and technical trainings.
Facilitate advocacy meetings to inform about achievements and challenges with district
authorities, government extension officers and DC representatives.
Capacity building of farmer extensionists and further strengthening and dissemination of
the Farmer Field School (FFS) approach.
Consolidating and promoting the conservation agriculture component to assist in
diversifying farmer income and ensure food security.
Pre-testing participatory sustainability assessment of farmer groups.
Revising the business training approach to emphasize on farming as a business.
Study tour for selected DC representatives to Uganda to enhance peer-to-peer learning
and understanding of participatory group structures.
Main achievements in 2015
8 additional DCs (total 32), 88 POs (total 337) and 143 active FFS at PO level
established. Internal monitoring systems implemented by 25 of the 32 DCs.
17 additional POs and 14 DCs have been registered under the Ministry of Home Affairs
Consolidation of input linkages and service provision in cooperation with private
companies (Yara Fertilizer Ltd., Obo Investment, NMB and CRDB). 14 DCs with more
than 5,000 households were linked to input suppliers for bulk procurement of genuine and
affordable inputs and technical assistance on proper application.
Amount of coffee bulked by the DCs and marketed at the national auction has almost
doubled from 241MT in season 2014/15 to 480MT already in season 2015/16.
3,147 conservation agriculture adopters implement minimum tillage practices on 1,693ha.
Main challenges encountered in 2015
Increased pest and diseases (stalk borer and CBD) caused high rate of cherry loss.
Flower abortion because of erratic rainfall due to changing climatic conditions.
Marketing permits for DCs for the national auction delayed due to bureaucratic
procedures for legal registration, which is a prerequisite for marketing permits.
DCs in Rungwe delayed in further processing the bulked coffee due to the demanded presales district cess by the district.
Main lessons learnt so far
Input suppliers and financial service providers show more and more interest in working
with the well-organized farmer groups.
Internal saving schemes in PO level increased cohesion of the farmer group.
High interest of farmer in conservation agriculture since higher yields can be seen
immediately. Professional bulk marketing of DCs attracts further members.
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Content
Executive Summary.......................................................................................................................... 1
Content ............................................................................................................................................. 2
High Level Progress & Project Outreach ......................................................................................... 3
Project Objective .......................................................................................................................... 3
Project Outreach .......................................................................................................................... 4
Progress on Specific Objectives ...................................................................................................... 6
Specific Objective I ....................................................................................................................... 6
Specific Objective II ...................................................................................................................... 9
Specific Objective III ................................................................................................................... 14
Specific Objective IV .................................................................................................................. 16
Project Finance & Strategic Partners ............................................................................................. 19
Appendix ......................................................................................................................................... 21
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High Level Progress & Project Outreach
Project Objective
The overall objective of the project is to improve the production systems of 12,000 coffee farmers
in southern Tanzania representing with their families about 60,000 people in total within 5 years in
order to exceed the poverty line of USD 1.0 per person per day in a sustainable way.
Indicator
Average Gross Margin per hectare
(in TSH)
2 Average Unit Cost (TSH/ lbs green)
Average productivity (60 kg bags
3
gbe / ha)
1
Season
13/14
Season
14/15
Progress
Project
Target
672,901
1,275,460
+ 602,560
1,600,000
472
341
-131
7.35
5.66
-1.69
8.33
The average gross1 margin of 746 US$/ha2 in season 2014/15 increased compared to 419
US$/ha3 for last season 2013/14. This was mainly due to the increase in coffee prices that
prevailed in the last marketing season. The average gross margin per lbs of green bean
equivalent (gbe) was 1.00 US$/lbs compared to the 0.43 US$/lbs received in the preceded
season 2013/14. This indicates that prices have a direct effect on the profitability and play a vital
role in motivating farmers to invest in their coffee production. Farmers need to be aware of global
marketing structures and the impact of fluctuations on the world market on national prices.
Access to information and different market structures can support them in taking informed
decisions on marketing their coffee for the best prevailing prices. In addition, the production costs
could be reduced due to bulked procurement of inputs by the farmer organizations.
The productivity per hectare in season 2014/15 was highly affected by hailstorms with about 75%
of cherry dropping in the affected areas in Mbeya rural and Mbozi. In addition, heavy rains within
short periods of time affected the production as well as increased incidences of Coffee Berry
Disease (CBD) due to continuous moist weather conditions. Although the program beneficiaries
progressively follow good agricultural practices, climate effects such as hailstorms have a direct
impact on their yields and can hardly be mitigated. HRNS has also intensified to train and
encourage farmers to rejuvenate their fields in collaboration with the DCs and Farmer Field
School Facilitators. HRNS promotes the rejuvenation with improved coffee varieties, which are
resistant against CBD and Coffee Leaf Rust to increase productivity and resilience.
Due to the fact that the current marketing season is still in progress, the average productivity as
well as the gross margin data from sample farmers for the season 2015/16 will be available in the
subsequent progress report.
1
The data for all gross margins is based on the sample project farmers and their production and marketing records.
2 Exchange rate per TSH/US$ of 1,710 in the season 2014/15
3 Exchange rate per TSH/US$ of 1,605 in the season 2013/14
4
Project Outreach
Indicator
1
2
3
4
5
Total Beneficiaries
Total Household Members
Total Farmer Organizations
Total of Impacted Farmland (ha)
Area under Coffee (ha)
Indicator
Coffee sold through farmer
organizations (60 kg bags gbe)
Total production of project coffee
2
(60 kg bags gbe)
1
Project
Target
12,000
60,000
265
22,800
13,200
31.12.2014
31.12.2015
Progress
9,072
45,375
274
12,598
62,990
369
17,237
23,936
10,977
16,881
+3,526
+17,630
+95
+ 6,699
+ 5,904
Season
13/14
Season
14/15
Progress
Project
Target
14,867
3,218
-11,649
22,000
80,949
81,654
+705
111,000
The program’s progress in outreach has been impressive with an increase of 3,526 households in
95 additional farmer organizations, which include the Producer Organizations (PO) as first-tier
structure as well as the Depot Committees (DC) as second-tier structure. This increase in
beneficiary households is reflected in the total impacted farmland and the area under coffee. The
increased interest of beneficiaries to join the HRNS program was due to the conservation
agriculture component as well as establishing effective linkages to service providers that were
enhanced by the intensified organizational development trainings, which farmer organizations
continuously receive from HRNS.
HRNS focused on business and management skill trainings on DC level and for selected POs.
This has contributed to build capacity of DC leaders and enabled 25 of the 32 DCs to significantly
professionalize their operations. The improvements in the DC management has strengthened
their member POs and attracted farmers to join existing POs and establish their own farmer
groups. Since HRNS has expanded its operations to additional wards, POs formed additional
DCs during the reporting period.
The bulking figures for 2014/15 refer to the first season of the DCs bulking on their own. The
amount of coffee marketed via the organizational structure went down compared to the season
2013/14 since the marketing approach had to be restructured after the end of the cooperation
with Shiviwaka4. Right now, the marketing season 2015/16 is ongoing, it will end in March 2016.
In their second season, the DCs have already become stronger and better connected to their
member POs. So far already almost double the amount of parchment has been bulked by the
DCs compared to the season 2014/15 (241MT in season 2014/15 compared to 480MT already
bulked in the current season 2015/16). Also the quality of the bulked coffee has improved and an
average curing loss of 19% could be maintained. The detailed quantity and quality figures of the
bulked coffee in season 2015/16 will be communicated in the next progress report.
4
HRNS had to stop its cooperation and support of the Apex Shiviwaka in the season 2014/15 due to transparency and
leadership issues, since the Board members were misled by individual interests, which resulted in the disjointedness between
the Board and the common members of the Apex.
5
Despite impacts of climate change taking a dramatic toll on coffee production, the total production
of HRNS beneficiaries still increased slightly in season 2014/15 due to areas of newly joined
beneficiaries. HRNS is supporting the beneficiaries to diversify their income by promoting the
climate-smart practices of conservation agriculture for maize and beans. Income diversification
and households’ food security have improved reasonably because of the higher yields and grossmargins resulting from adopting these practices. In the four districts of Mbeya region already
3,147 households have adopted these practices on 1,693 ha in total.
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Progress on Specific Objectives
Specific Objective I
Facilitate the formation and strengthening of business orientated, member driven and democratic
two-tiered farmer organizations and their Apex as transparent and professional service providers
to their farmer members.
Main activities of project on specific objective
HRNS has continued sensitization of farmers in new areas reflected in the establishment of 8
additional DCs and 88 POs in 2015. The number of beneficiaries has increased from 9,072 to
12,598 organized in 337 POs and 32 DC. Existing farmer groups are eager to increase their
membership to make their operations more sustainable. Therefore, farmer extensionists in
cooperation with HRNS facilitates the expansion of existing farmer organizations to reach an
average of at least 50 members per primary and 500 for secondary structure. This goes in line
with the continuous strengthening of farmer groups’ capacities and supporting them in
professionalization of their processes and services (including reviewing their constitutions and bylaws, establishing codes of conduct, facilitation internal auditing, establishing councils and
committee on DC level). HRNS has facilitated and backstopped 795 organizational development
trainings and 612 business skill trainings in 2015.
To improve the efficiency of trainings, HRNS has started to facilitate the assessment of the DCs
in a participatory way to identify the major training needs and identify their sustainability status.
Based on these assessments organizational training will be conducted focusing on the challenges
of the DCs. Further meetings with financial institutions and input providers will be facilitated to
strengthen the linkages between the DC structures and the service providers. For POs,
sustainability criteria have also been developed, which will be field-tested beginning of 2016 to
conduct a comprehensive assessment of the sustainability status of DCs and POs at the end of
the marketing season 2015/16. In addition, HRNS has facilitated trainings on constitution
formulation for new DCs and POs as well as reviewing the constitutions for the established farmer
groups to support them in fulfilling all requirements for their legal registration. Besides supporting
farmer groups in meeting all requirements for legal registration, trainings on bulk marketing and
internal savings trainings were prioritized during the reporting period to strengthen the coherence
of the farmer groups.
During the reporting period, HRNS organized local exchange visits for producers and an
international study tour for DC representatives to Uganda to show the importance of participatory
group structures, farmer-to-farmer extension, business, administration, and marketing skills from
their fellows. In Uganda, the Tanzanian delegation visited well-structured DCs with established
committees on finance, business and self-control, which are guiding executives in performing
their duties and responsibilities. In addition, DCs in Uganda have already established a
professional accountability system and monitor members’ funds closely. As follow-up of the study
tour, the participating DC representatives will conduct feedback meetings with their group
members to sensitize them on the importance of active committees within their structure and
develop an action plan on implementing them.
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Main achievements
Indicator
% of supported farmer
organizations with management
1
committees and established bylaws
Number of coffee farming
2 households as active members of
these Farmer Organizations
% of supported farmer
3 organizations (POs) which comply
with established code of conduct
31.12.2014
31.12.2015
72%
87%
(184 POs
(290 POs
and 15 DCs) and 30 DCs)
Progress
Project
Target
+15%
50%
9,072
12,598
+3,526
12,000
38%
(91 of 240
active POs)
40%
(134 of 337
active POs)
+2%
30%
HRNS has conducted organizational development trainings on PO and DC level, which have
facilitated the establishment of additional 88 POs and 8 DCs during the reporting period totaling
to 337 supported POs and 32 DCs. HRNS promotes transparent management systems within the
farmer groups through elected management committees and developed by-laws. POs and DCs
have been trained and assisted in establishing selection criteria for their office bearers and
extensionists. Management and leadership are vital catalysts for sustainability of farmer groups.
Therefore, HRNS continuously supports and backstops the elected farmers to enhance their
capacity and sustain their organizations. In 2015 already 87% of the supported farmer groups had
established by-laws. HRNS will further support the farmer groups in accessing their farmer group
performance based on sustainability criteria including participatory governance structures,
marketing performance, transparent administration and business procedures. Based on these
assessment the training needs are identified and a stepwise approach defined to strengthen the
farmer organization.
The exposure to well-performing and professional managed DCs in Uganda has inspired and
motivated the participating farmers to copy and even surpass their colleagues’ achievements. All
participants were impressed by the professional operations of the DCs in Uganda and are eager
to share their experiences with their fellow group members to professionalize their operations.
HRNS will support these processes by intensifying related assistance and technical support to
facilitate the newly set goals and objectives on DC and PO level.
Main challenges encountered
Building sustainable farmer groups takes time and during the process members need to
gain trust in their leaders. Close backstopping is needed to ensure that tailor-made
technical support can be offered to the farmer groups and support them in their individual
organizational development processes.
Registration of farmer organizations is centralized in Dar es Salaam, which implies
logistical challenges for the locally oriented farmer organizations due to limited resources.
However, legal registration is necessary for any kind of business (e.g. open bank
accounts, access loans, market their bulked coffee at the national auction) and the lack of
a legal status affects their business proceedings.
Main lessons learnt
HRNS has noticed that transparency of farmer groups’ operations contributes highly to
attract new members to join the organization. This has been reflected in the increase in
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membership of the well-governed farmer groups. Therefore, HRNS emphasizes on
ensuring that all POs and DCs select and establish management committees
democratically.
The establishment and consolidation of farmer organizations requires intensive support
and patience over a long period of time. Adequate resources need to be allocated for both
phases.
Learning as well as implementation is enhanced through study tours and exchange visits,
since farmers learn best through exposure and best practice examples by their fellows.
Internal savings schemes are vital for members to enhance their sense of ownership.
These schemes strengthen the internal procedures of farmer organizations, lead to an
increased commitment of the members and provide short term funding mechanisms at
low interest rates.
Farming as business trainings need to encompass accurate record keeping at farm level
and transparent marketing records at farmer group level. Basic tools and quick benefits of
keeping records need to be available to make farmers adapt these practices and realize a
change in mind-sets of farmers.
Involvement in trainings as well as continuous communication on the program’s progress
and challenges with local authorities is important for them to effectively contribute to the
running of the program and address producer related challenges.
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Specific Objective II
Enable farmers to significantly improve coffee production and overall farm management in a
sustainable way.
Main activities of project on specific objective during the reporting period
In 235 trainings HRNS staff has facilitated the establishment of Farmer Field Schools (FFS) on
farmer group level to strengthen the farmer-to-farmer extension system. The farmer extensionists
are selected by their group members, trained on Good Agricultural Practices (GAP), and
backstopped by the HRNS team while facilitating FFS sessions. During the reporting period, 97
additional agronomy farmer extensionists have been identified and provided with bicycles to
support their fellow producers. In total 400 coffee agronomy trainings have been conducted and
backstopped by HRNS staff in 2015 and coffee demonstration plots have been established on
farmer group level to facilitate the FFS approach.
Figure 1: training contacts in 2015
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Since 2012, HRNS has built up on the established organizational and farmer-extension structure
to facilitate trainings on conservation agriculture (CA)5 for food crops (maize and beans) as
implementer of the regional Conservation Agriculture Regional Program (CARP)6. As part of this
program, HRNS facilitated trainings, demonstration plots, field days, and backstopping of the
farmer-to-farmer extension to increase food security and income diversification. HRNS also
worked with the Prisons and National Service Unit to further promote the use of mechanized
tillage system under the conservation-farming program.
The demonstration plots for coffee as well as for conservation agriculture act as meeting and
training grounds for farmer groups through discussions about good agricultural practices and
sharing of experiences. Besides technical trainings HRNS also financially supports the
demonstration plots with genuine inputs in cooperation with Yara Fertilizer Ltd., which contributed
the fertilizer for 50% of the coffee and the conservation farming demonstration plots (worth about
10,000 US$) in 2015. Following the distribution of inputs, trainings on fertilizer management and
application were conducted in the on farmer group level. The influx of fake inputs and the
increase in pests and diseases is still a big challenge for the producers and contributes to high
production cost. HRNS is advising all its project beneficiaries on the importance of getting inputs
from established and genuine suppliers only as well as on bulked input procurement. HRNS also
facilitated three pre-seasonal planning meetings for DC representatives and input suppliers.
HRNS also promotes the rejuvenation of old coffee trees with improved varieties, which are
resistant against CBD and Leaf Rust. During the reporting period, the establishment of 72
seasonal compact nurseries7 has been supported to facilitate the availability of improved planting
materials. In total, 122 nursery managers have been trained in nursery establishment and
management as well as business skills in 2015 in cooperation with the Tanzanian Coffee
Research Institute (TaCRI). HRNS also supports 50% of the nurseries’ costs and the nursery
managers themselves take up the remaining 50%. Since the improved varieties produce already
after two seasons, farmers can observe and discuss the benefits of these varieties during their
FFS sessions. HRNS will further support farmers in monitoring the performance of the improved
varieties and compare them with the traditional varieties.
Main achievements
Indicator
1
2
3
5
Number of seasonal nurseries
established
Number of Farmer Field Schools
established
Number of farmers being exposed
to conservation agriculture to
support food security and income
diversification
Project
Target
31.12.2014
31.12.2015
Progress
36
72
+36
135
143
+18
200
9,669
12,598
+2,929
10,000
Conservation Agriculture includes widely acknowledged technologies that offer farmers the opportunity to increase their
productivity, adapt more effectively to adverse climatic conditions, improve soil fertility and minimize negative impacts of
agriculture on the environment. These practices include: Minimum tillage, no burning of residue, correct and precise spacing,
crop rotation, timely land preparation, planting, and weed control.
6
The regional program CARP is coordinated by the Conservation Farming Unit (CFU) and supported by the Ministry of Foreign
Affairs of the Royal Norwegian Government.
7
Compact nurseries use seeds of the improved variety to grow seedlings. Compact seeds need to be supplied by TaCRI and
cannot be multiplied. Therefore, the distribution of these seeds depends on the supply by TaCRI.
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Indicator
% of beneficiaries planting
improved seedlings
% of beneficiaries adopting >50%
of GAP best practices
4
5
Season
13/14
Season
14/15
Progress
Project
Target
31%
48%
+17%
40%
65%
75%
+10%
75%
The established farmer-to-farmer extension system based on the FFS approach in combination
with backstopping and trainings by HRNS staff has resulted in an increased GAP adoption rate of
the beneficiaries. In addition, HRNS has introduced a strategy to increase production and quality
in all POs and DCs. During the reporting period, about 3,000 households have started to pioneer
the strategy, which entails to allocate a part of their fields (at least 500 coffee trees) as their own
on-farm demonstration plots and follow all GAPs in the recommended way. This strategy has
motivated farmers to start with GAP adaptation although they cannot afford the recommend
amount of inputs for their entire coffee field. In line with this approach the 143 FFS are actively
conducing their planned activities following the recommended cropping calendar. HRNS staff in
collaboration with the farmer extensionists continuously trains farmers on the recommended
GAPs as well as newly introduced production and field management techniques.
A stepwise approach is also promoted for rejuvenation and replanting of coffee fields with the
improved varieties. Due to higher coffee prices in season 2014/15 and better access to improved
seedlings, more households have become interested in improved seedlings. HRNS facilitates the
availability of seedlings in the project area through the establishment of seasonal compact
nurseries. These nurseries are owned and managed by farmer groups and individual PO
members on a commercial basis. The 72 supported seasonal nurseries have produced and
disseminated 550,000 seedlings. These seedlings are either distributed to group members as
compensation for their in-kind contributions to the nursery or sold to fellow farmers for
0.14US$ per seedling. Based on an estimation of the demand of improved seedlings by the
beneficiaries in Mbeya in total more than 3.2 million8 seedlings have to be produced based on an
average number of 255 demanded seedlings per farming household. HRNS will further involve
the nursery managers in the cooperation with TaCRI to facilitate the procurement of improved
seedlings in the next seasons.
HRNS has strengthened its cooperation with input suppliers including Yara Fertilizer Company,
Balton, Triachem as well as the local suppliers Obo Investments and Kalinga. As result of the
continuous sensitization of the importance of bulk procurement of genuine inputs and facilitation
of meetings with the input suppliers, 14 DCs and their members were linked to Yara Fertilizer Ltd.
and Obo Investments to establish their input schemes for coffee and maize inputs. During the
2014/15 seasons, these 14 DCs procured inputs worth about 40,000US$ for their members using
input loans with a repayment rate of 100%. An average farming household can save up to
115,000 TSH by procuring inputs in bulk via the farmer group. For the 5,000 household
benefitting from the input schemes on DC level, this would add up to 575,000,000 TSH (approx..
337,000 US$ with an average exchange rate TSH/US$ of 1,710 in the season 2014/15).
HRNS has started to assess the combined coffee and food crops approach and the impact on
smallholders’ livelihoods in more depth. In order to find out whether an integrated approach is
more effective in addressing farmers’ needs an external consultant conducted in-depth interviews
with one typical farmer per district as a preparatory step for a more extensive quantitative and
8
The estimate is based on interviews with 1,159 households of 34 sampled POs indicating a total demand of 295,300 seedlings
for the season 2015/16.
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qualitative assessment of our current conservation agriculture initiative. As a first finding, farmers
grow a variety of crops to avoid seasonal cash shortages and make their farms less exposed to
major risks and more resilient against price and weather shocks. In addition, farmers use income
from food crops mainly for small expenses as well as farm inputs and income from coffee for
larger expenses and investments. Furthermore, farmers plan land and input allocation on their
farm according to these different cash needs. While taking into consideration the multiple
objectives of the farmers and the interaction between the crops, the combined support for the
different crops (food and cash crops) seems to best address the needs of farmers and makes
farming as a whole more attractive. Strong and independent farmer organizations can provide
respective support and also benefit through a diversification of their service portfolio. HRNS will
further assess the impact of the combined approach and identify best practices for future projects.
Main challenges encountered
Changing climatic conditions are still the major challenge for farming households. During
the reporting period more than 75% of the coffee cherries were lost due to heavy
hailstorms in Mbeya rural and Mbozi that had already lost about 65% of the flowers in the
preceding season. This was followed by short and heavy rainfall that destroyed a few
berries that were left on the coffee tree. These climate impacts in two consecutive
seasons have a big effect on the average yield in Mbeya region. In addition, erratic rainfall
has severely affected coffee yields, since the rains came late and poured heavily, they
severely affected the coffee, banana, and maize production.
Some input suppliers still demand collateral security and have bureaucratic requirements
fro POs and DCs, which discourages producers to procure inputs in bulk form these input
suppliers.
Although, this season 72 seasonal nurseries produced 550,000 compact seedlings, the
supply of compact seeds will not meet the farmers’ demand in the next seasons.
Therefore, HRNS will strengthen the cooperation with TaCRI and provide further technical
and financial assistance to the nursery operators in order to produce more improved
seedlings.
The change in mindset of farmers towards farming as business is vital. HRNS has
improved the business and entrepreneurial skills trainings for producers, nursery
managers, and farmer group representatives. The revised curriculum encompasses
entrepreneurial skills (including the facilitation of farming as business) and technical skills
(including basic profit-and-loss calculations and record keeping). HRNS is also
intensifying backstopping of sample farmers to ensure their proper record keeping that
they act as role models for their fellow PO members in record keeping and farm
budgeting.
Main lessons learnt
The adoption of improved GAP has been enhanced through the consolidation of FFS and
demonstration plots. This is because these sessions are held at producers’ own time and
place with their resources and conducted in languages best understood by themselves.
HRNS encourages every beneficiary household to use a stepwise approach to upgrade
their coffee fields by following all GAPs in the recommended way including rehabilitation
of the fields. This has encouraged farmers, since they could reach similar effects as on
the HRNS supported demo plots on their own fields. The demo plots are yielding on an
average of 2.5 kg of parchment per tree compared to an average of 0.3 kg per tree act
farmers’ fields.
Climate change impacts had a high effect on coffee and food crop production. Therefore
adaptation to climate change needs to go beyond the farm level and also takes into
consideration community and landscape approaches.
13
Facilitated meetings with input suppliers and producers have enhanced understanding for
both sides on the requirements and procedures of input loans. Input suppliers have
become interested to promote their products on demo plots and enabling households’
easy access to genuine inputs. The cooperation with well-organized farmer groups
bulking their input demand has been successful and needs to be intensified.
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Specific Objective III
Enhance coffee quality through improved practices and management.
Main activities of project on specific objective:
HRNS facilitated the selection and training of Marketing Coordinators on DC level. These
Marketing Coordinators are responsible for professionalization of their marketing and information
flow to the group members. The DC Marketing Coordinators are trained on quality standards,
marketing plans and budgets. In cooperation with the HRNS staff and the farmer extensionists on
PO level, they support their group members on coffee quality improvement. In addition, premarket planning meetings with their respective DCs have been facilitated by the Marketing
Coordinators to agree on a common strategy for the marketing season.
During the marketing season, HRNS has supported the Marketing Coordinators to organize dry
mill curing pre-bookings for DCs’ coffee and the distribution of collection bags. In total, 67 coffee
quality trainings covering harvest and post-harvest techniques for farmer extensionists have been
conducted in 2015. HRNS has also further promoted the use of raised coffee drying tables to
improve coffee quality through better post-harvest management.
Main achievements
Indicator
1
% of beneficiaries applying
improved coffee drying
technologies
Indicator
2
% of farmer groups separate
bulked coffee according to quality
31.12.2014
31.12.2015
Progress
Project
Target
85%
90%
+5%
90%
Season
13/14
Season
14/15
Progress
Project
Target
95%
95%
+0%
90%
Harvest and post-harvest practices are vital for the implementation of coffee quality standards.
Improved adaptation of recommended practices could be assured through trainings and intense
backstopping on farm and farmer group level. In addition, promotion of drying technologies and
raised drying structures has contributed to enhanced quality of the coffee.
HRNS has also enhanced the capacity of DC Marketing Coordinators and other DC
representatives to monitor quality. DCs have organized their own sample drawers to improve
quality control on DC level and HRNS has provided them with 30 hanging weighing scales to
monitor proper bagging. The DC representatives have agreed on quality standards including
checking the moisture content of collected coffee, storage, and transport (e.g. not using poly
bags, not storing on the ground, and not mixing with other materials while transporting, if public
transport is to be used). 25 DC Marketing Coordinators have already implemented these quality
control standards in their DCs in collaboration with the PO farmer extensionists. In addition, the
implementation of certain quality standards on farm level are followed up by the DC Marketing
Coordinators, including the use of drying structures, sorting at processing, as well as proper
fermentation and washing processes.
Main challenges encountered
The bureaucratic process of releasing marketing permits by the Tanzanian Coffee Board
contributed to delays of DCs’ deliveries and overall bulking.
15
The increased number of private buyers affected the bulking arrangements by POs and
DCs resulting in lower volumes of bulked coffee on DC level. Since most of the private
buyers approach women, it is vital to include women in pre-marketing, marketing and
technical trainings in order to mitigate and reduce side selling of coffee at household and
PO level. HRNS is working towards the inclusion of women in DC marketing coordination
through awareness meetings and marketing training in all POs and DCs. Side selling has
a high impact on coffee quality and the households’ coffee income in the long run, since
DCs remunerate their members according to quality while private buyers pay the same
amount for all qualities.
Through bulk marketing via the farmers’ organizational structures, farmers receive
detailed information on the quality of their coffee and the received price at the national
auction. Therefore, farmers can be directly informed about the relation between quality
and price.
Coffee prices have an indirect effect on the quality produced in the following season,
since famers’ motivation and resources depend on their income from coffee. If coffee
prices do not meet the costs of production farmers have limited resources to acquire
inputs for proper GAP application and will not invest in rejuvenation.
Main lessons learnt
Producers have started to understand the importance of coffee quality through
transparent information flow of the bulked coffee. This has led to separation of the bulked
coffee according to quality separation by the DC Marketing Coordinators in collaboration
with the HRNS Business Advisor.
During the DC marketing feedback meetings facilitated by HRNS Business Advisor in
cooperation with the DC Marketing Coordinators and the farmer group leaders, farmers
get a detailed overview on the bulked volumes, the curing losses, qualities produced,
prices received at the auction and the deductions made. This transparent system
encourages farmers to increase quality to get better prices for their coffee.
16
Specific Objective IV
Improve overall marketing performance of Depot Committees and Apex structure through value
addition and efficient linkage to marketing agencies, exporters and international traders.
Main activities of project on specific objective
To further support the DCs in marketing their bulked coffee on behalf of their members at the
national auction, HRNS has conducted marketing trainings and pre-marketing meetings at DC
and PO level in cooperation with the DC Marketing Coordinators and the DC Executive Board
members. Close follow-ups with TCB have been provided by HRNS for the DCs’ coffee lots
marketed at the national auction to ensure timely auctioning, setting appropriate reserved prices,
follow-up with interested buyers and organizing the payment procedures. To build the capacity on
DC level and empower the DC Marketing Coordinators to take up these tasks by themselves,
HRNS has strengthened the established linkages between DC representatives and traders,
millers, as well as the TCB.
HRNS has also facilitated meetings of DC executive leaders and government officials from
Rungwe district, to resolve the challenges of Rungwe farmers that the district council expects
farmers to pay the district cess before transporting the coffee to the dry mills. Farmers and their
farmer groups do not have the resources to pre-finance the district cess, so farmer tend to sell
their coffee to middleman and private companies instead of bulking it via their DCs to get a higher
share of the market price. HRNS facilitated several meetings between the DC representatives
and district official and invited farmer representatives to the quarterly meeting between HRNS
and high-level district officials among them the District Executive Director (DED) and the District
Treasurers to address their concerns on the district cess. As result of these meetings the DC
representatives and district officials reached an agreement, which allowed the DCs to pay the
district cess after the coffee has been marketed at the auction. Although the process to reach an
agreement delayed the marketing, the relationship between the farmer representatives and the
district official was established and for the next season such an agreements can be more easily
negotiated.
Main achievements
Indicator
1
2
3
Total amount of clean coffee
marketed by supported farmer
organizations (kg)
Relation between price/ kg
parchment paid to farmers
marketing via the Apex/DCs and
average farm-gate price
% of farmer organizations having
access to loans
Season 13/14
Season 14/15
Progress
892 MT clean
coffee9
193 MT clean
coffee10
-699 MT
clean
coffee
2,848 vs. TZS
2,100 TZS
26% increase
due to Apex
5,574 TZS vs.
3,525 TZS
37% increase
due to bulking
+11%
57%
56%
-1%
Project
Target
50%
Despite the end of the cooperation with the Apex Shiviwaka in the season 2014/15, the
established organizational structure empowers farmers to get the maximum share of the FOB
price through bulking via their DCs. DCs are extensively supported by the HRNS business
advisor to market on their own. This includes trainings on the coffee marketing system, since
9
Based on the amount of coffee marketed via the Apex Shiviwaka and the DCs in season 2013/14.
Based on the amount of coffee marketed via the DCs and POs in marketing season 2014/15 via the national auction.
10
17
many farmers are not aware of the complexity of the national and international marketing
structures. In addition, support was given to the DCs during the milling processes at the dry mill to
ensure timely and proper handling of the bulked coffee. Close follow up was also needed before
and during the marketing of the coffee at the national auction to ensure issuing of marketing
permits, follow up on the coffee during the auction including setting reserved prices and
negotiating with buyers, and payments. Since all transactions need double-checking and close
follow-up to ensure professional handling by the Tanzanian Coffee Board and banks involved,
HRNS is still supporting the DCs with these processes.
In the season 2014/15 the difference between the prices farmers could get by marketing via their
DCs compared to average farm-gate prices was even higher than in the previous season, when
the Apex organization was still charge of the marketing. These price differences have encouraged
farmers to market a higher share of their coffee via the DCs in the current season because they
have built trust in the DC marketing structure.
In their first marketing season 2014/15 DCs only received a quarter of the bulked volumes on PO
level due to bureaucratic legal registration procedures which delayed the marketing permits for
DCs, delays in the processing further marketing documents, pre-sales and district cess
demanded by Rungwe district, and high competition by private buyers offering cash on delivery.
HRNS further strengthens the capacity of DC Marketing Coordinators and the Executive Board to
conduct bulking and milling follow-ups, to acquire auction permits from the TCB in time, and
engage with the district authorities to receive favorable conditions. In addition, HRNS uses the
farmer-to-farmer extension system to sensitize on the benefits of bulk marketing as well as to
disseminate relevant marketing information to all beneficiaries. This has resulted in an increase of
the bulked coffee in the current season 2015/16 to 480MT of clean coffee compared to 241MT in
the season 2014/15. The volume of bulked coffee will gradually increase as HRNS supports the
DCs to strengthen their capacities, professionalize them and to deal with the regulatory
challenges.
All registered farmer organizations have access to loans from commercial banks, such as
National Microfinance Bank (NMB) and Community Rural Development Bank (CRDB). The
registered groups make up 55% of the supported POs (184 out of 337 POs) and 74% of the
supported DCs (25 out of 32 DCs). 10 POs and 2 DCs made use of this financing opportunity and
received a total of 349,710US$ as input loans from CRDB and NMB on warehouse receipt
system11 basis for the season 2015/16.
Legal registration is vital for POs and DCs to be able to access input loans and increase their
yields by applying genuine inputs in time. Therefore, HRNS continuously engages with the
Ministry of Home Affairs to ensure the registration applications by the farmer groups follow the
correct procedures and support the DCs to follow-up on the bureaucratic procedures of
processing the registration document sin Dar es Salaam.
Main challenges encountered
Registration is still a challenge for DCs and POs due to the bureaucratic procedures.
Since farmer groups need to be registered to do business, HRNS supports them with
application and close follow-up.
Due to the delay of registration and marketing permits POs have to market their bulked
coffee via a different DC, if their DC is not yet registered. Since the POs do not have a
11
Due to the lack of adequate collateral of farmers, banks use warehouse receipts for input and marketing loans to farmers,
which are based on the deliveries of farmers’ coffee to the warehouse. Repayment of loans is secured by deducting the
amounts from payments for sold coffee at the national auction.
18
direct representation in these DCs, trust is a challenge and not all bulked coffee on PO
level is marketed by the DCs. In addition, the hosting DC has more administrative work
while experience is still missing on how to handle the marketing. Therefore, HRNS
continues to support them with capacity building on marketing and administration.
Main lessons learnt
Producers need time to build trust in the newly introduced marketing system via their
DCs. The gradual development of the DCs is vital to build member POs trust in their
marketing competencies. The focus needs to be on administrative capacity building and
regular coordination meetings to promote participatory and transparent business activities
for all member POs.
The lack of bureaucracy and proper decision making processes at DC level, have lead to
a gradual increase in coffee volumes delivered at DC level. DC members appreciate the
transparent establishment of marketing plans, which gives them sense of ownership for
the plan and its execution.
Involving the DC Marketing Coordinators has increased their ownership and active
engagement in the marketing activities. The DC Marketing Coordinators have established
good working relationships with the dry mills and already started to draft milling plans for
the next season. These plans include the delivering period, collection of packaging
materials, blocked booking for their parchment curing and tentative factory study visit.
Other Marketing Coordinators have expressed their interest in visiting the TCB laboratory
to learn more about coffee quality.
19
Project Finance & Strategic Partners
Financial contributions to project
The Coffee Farmer Alliance forms part of the overall HRNS Tanzania program targeting 25,000
beneficiaries in northern and southern Tanzania until December 2016. The contributions listed
below are ongoing and refer to the entire TZ program.
ICP Contribution
Lavazza Foundation
Swedish International Development
Cooperation Agency (Sida)
Bill & Melinda Gates Foundation
(BMGF) via DEG
Conservation Farming Unit (CFU)
Rabobank Foundation
Accountability for Tanzania (funded by
DFID)
% Share
Total Contributions
Private
Partners
800,000 EUR
300,000 EUR
Public
Partners
NGO /
Foundation
800,000 EUR
1,072,950 EUR
1,600,000 EUR
500,000 EUR
91,840 EUR
21,3%
42,2%
5,164,790 EUR
30,5%
Funding of the HRNS program by Rabobank Foundation as well as CFU has ended in 2015.
BMGF/DEG funding will continue until December 2016. Further funds have been obtained by the
Accountability for Tanzania Program (funded by DFID) in 2015. The program will start its second
phase in 2016 with a call for proposals.
The ICP project will be up-scaled to support the overall Tanzania program in Northern and
Southern Tanzania targeting 25,000 households with an holistic approach including:
-
Organizational development
Coffee productivity and production
Quality enhancement
Service linkages
Conservation agriculture
Climate change adaptation
Gender.
Further funding is envisioned from DFID via the Accountability for Tanzania Program, IDH and
the Swedish International Development Cooperation Agency (Sida), who are also interested to
co-finance the gender component within their overall proposal. Funding from Coffee Kids is
expected to support the implementation of the planned youth component in Kilimanjaro region in
2016.
Key Strategic Project Partners in 2015
District Council and Agriculture Offices (Local Government)
Tanzania Coffee Board (TCB)
Tanzania Coffee Research Institute (TaCRI)
National Microfinance Bank (NMB) Foundation and National Microfinance Bank
20
CRDB Bank
Coffee Partnership Tanzania (CPT) coordinated by Deutsche Investitions- und
Entwicklungsgesellschaft GmbH, (implementing partners HRNS, Ecom, CMS, Tembo
Coffee Company, DAE, OLAM, Hivos and Solidaridad)
Conservation Agricultural Regional Program (CARP) coordinated by the Conservation
Farming Unit, Zambia
Initiative for coffee&climate
21
Appendix
Sample farmer case story on the food-cash crop approach
Food Crop and Cash Crops:
An integrated program approach is vital to substantially improve
livelihoods of smallholder farming households in Tanzania.
Lilian Mwashigala from
Mbeya rural, South
Tanzania:
“I depend on growing a
variety of different
crops.”
Her monthly cash-flow for the season 2014/15
2.000
1.500
+781 +830
USD
1.000
500
+439
-31
-31
0
-108
-14
-14
-123
-61
+4
Feb
Mrz
Apr
Mai
Jun
Jul
-447
-500
-1.000
Sep
Okt
Nov
Dez
Jan
Coffee in US$
Maize in US$
Beans in US$
school fees in US$
Accumulated Cash Flow in $
2
Aug
Land allocation in ha
0,40 0,20
0,81
3,64
2,02
Coffee
Beans
Vegetables
Maize
Eucalyptus trees
As a farmer since 1974 Lilian has
organized her farming system in an
integrated way. While income from maize is
used for recovering farm expenses, the
coffee income covers the costs for the
school fees of her two children.
Selling her coffee via her farmer
organization enabled her to get a good
income from coffee.
22
Photos
Training with Farmer Field Book holders in Lubanda DC
Flowering coffee field in Mbeya rura
23
Coffee field affected by the hails storm in Mbeya rural
Distributing bicycles to farmer extensionists on DC level in Mbeya rural
Annex 1: ICP KPI Reporting Sheet
ICP Tanzania CFAT
Project
Tanzania
Location
Project Outreach
Indicator
Unit
01.01.2015
01.01.2016
Change
Ongoing beneficiaries
# households
9.072
12.598
+ 3.526
Total beneficiaries
# households
9.072
12.598
+ 3.526
Total household members
# individuals
45.360
62.990
+ 17.630
Area under arabica
hectare
10.977
16.881
+ 5.904
Area under robusta
hectare
0
0
+0
Area under cocoa
hectare
0
0
+0
Total of impacted farmland
hectare
17.237
23.936
+ 6.699
01.01.2015
01.01.2016
Change
Training Contacts (TC)
data relates to the TCs in the calendar year previous to reporting date
Indicator
Unit
TC org. dev. male
training contacts
16.087
36.097
+ 20.010
TC org. dev. female
training contacts
2.751
7.485
+ 4.734
TC agronomy male
training contacts
20.848
29.316
+ 8.468
TC agronomy female
training contacts
3.455
6.465
+ 3.010
TC climate male
training contacts
1.103
118
- 985
TC climate female
training contacts
219
28
- 191
TC other male
training contacts
0
0
+0
TC other female
training contacts
0
0
+0
Unit
2013/14
2014/15
Change
% of ongoing benef.
n/a
n/a
----
Harvest / post-harvest practices % of ongoing benef.
n/a
n/a
----
Climate change adaptation
% of ongoing benef.
n/a
n/a
----
Hectare under GAP
hectare
n/a
n/a
----
Coffee Agronomy - Adoption Rates
Indicator
Good agricultural practices
1
Total Production and Bulking of target crop
Indicator
Unit
2013/14
2014/15
Change
Arabica: total production
60 kg bags gbe
80.949
81.654
+ 705
Arabica: sold via FOs.
60 kg bags gbe
14.867
3.218
- 11.649
Robusta: total production
metric tons faq
+0
Robusta: sold via FOs.
metric tons faq
+0
Cocoa: total production
metric tons faq
+0
Cocoa: sold via FOs.
metric tons faq
+0
Farmer Organizations - First Tier organizations by sustainability status
Indicator
Unit
01.01.2015
01.01.2016
Change
Exceptional (A)
# organizations
+0
Sustainable (B)
# organizations
+0
Transition phase (C )
# organizations
+0
Inception phase (D)
# organizations
+0
Dysfunctional
# organizations
+0
TOTAL
# organizations
240
337
+ 97
Farmer Organizations - Second Tier organizations by sustainability status
Indicator
Unit
01.01.2015
01.01.2016
Change
Exceptional (A)
# organizations
+0
Sustainable (B)
# organizations
+0
Transition phase (C )
# organizations
+0
Inception phase (D)
# organizations
+0
Dysfunctional
# organizations
+0
TOTAL
# organizations
24
32
+8
Farmer Organizations - Third Tier organizations by sustainability status
Indicator
Unit
01.01.2015
01.01.2016
Change
Exceptional (A)
# organizations
0
0
+0
Sustainable (B)
# organizations
0
0
+0
Transition phase (C )
# organizations
0
0
+0
Inception phase (D)
# organizations
0
0
+0
Dysfunctional
# organizations
1
1
+0
TOTAL
# organizations
1
1
+0
2
Farmer Organizations - Value Addition
Total value added directly by farmer organizations to beneficiaries
Indicator
Unit
2013/14
2014/15
Bulk marketing
TZS
1.084.919.325
Input bulking
TZS
Access to finance
TZS
TOTAL
TZS
Profitability - Arabica
All values in the below table are on per hectare basis
Indicator
Yield
Planting Density
Variable Production Costs
Cost reduction through value
addition
Avg. farm gate price
Avg. Price via FO
Share sold via FO
Unit
60 kg bags gbe
produc. trees / ha
TZS
494.526.150
0
1.084.919.325
2013/14
TZS / 60kg gbe
TZS / 60kg gbe
% total production
494.526.150
2014/15
7,4
1.606
459.202
5,7
1.424
255.181
0
0
140.625
213.600
18%
264.375
418.050
4%
1605
1710
TZS
Unit
2013/14
2014/15
Yield
Planting density
Variable production costs
Cost reduction through value
addition
Avg. farm gate price
Avg. price via FO
Share sold via FO
metric tons
produc. trees / ha
TZS
Profitability - Cocoa
All values in the below table are on per hectare basis
Avg. price via FO
Share sold via FO
- 590.393.175
Change
- 1,7
- 182
- 204.020
+0
+ 123.750
+ 204.450
- 14 %
Change
+ 0,0
+0
+0
TZS
+0
TZS/ mt
TZS/ mt
% total production
Indicator
Avg. farm gate price
+0
All values in the below table are on per hectare basis
Indicator
Yield
Planting density
Variable production costs
Cost reduction through value
addition
- 590.393.175
+0
exchange rate TSH/US$
Profitability - Robusta
Change
Unit
ton dried cocoa
produc. trees / ha
TZS
TZS
TZS/ ton dried
cocoa
TZS/ ton dried
cocoa
% total production
+0
+0
+0%
2013/14
2014/15
Change
+ 0,0
+0
+0
+0
+0
+0
+0%
3
Gross Margin Calculation
Indicator
Arabica / ha
Arabica / lbs green
Arabica / tree
Robusta / ha
Robusta / metric ton
Robusta / tree
Cocoa / ha
Cocoa / ton dried cocoa
Cocoa / tree
Unit
TZS/ ha
TZS/ lbs gbe
TZS/ prod tree
TZS/ ha
TZS/ mt
TZS/ prod tree
TZS/ ha
TZS/ ton dry
TZS/ prod tree
2013/14
672.901
692
419
0
0
0
0
0
0
2014/15
1.275.460
1.704
896
0
0
0
0
0
0
Change
+ 602.560
+ 1.011
+ 477
+0
+0
+0
+0
+0
+0
4
Annex 3: GM Seasonal Comparison Graph ARABICA
ICP Tanzania CFAT
Mbeya, Tanzania
Project
Location
Ths. TZS
Gross Margin of Arabica Production (per year and hectare)
1.800
1.600
1.400
1.200
1.000
800
600
400
200
0
+1.484
+1.528
+1.275
+1.275
+1.275
+1.071
+673
Gross
Margin:
2013/14
General
Price Effect
(+910)
Value
Yield Effect Production
Value
Addition
(-457)
Cost Effect Addition:
Bulk
(+204)
Cost
Marketing
Reduction
(+45)
(+)
Gross
Margin:
2014/15
TZS
Gross Margin Arabica Production (per year and lbs gbe)
1.800
1.600
1.400
1.200
1.000
800
600
400
200
0
+1.526
+1.704
+1.572
+1.704
+1.704
+692
Gross Margin: General Price
Value
2013/14
Effect
Addition Bulk
(+936)
Marketing
(+46)
Operational Cost per hectare (in TZS)
Value Addition - Cost reduction
Yield per hectare (60 kg gbe)
Yield per hectare (lbs gbe)
Average price farmgate (TZS / lbs)
Average price FO (TZS / lbs)
Share sold via FO (%)
Production
Value
Gross Margin:
Cost Effect Addition: Cost
2014/15
(+131)
Reduction
(+)
2013/14
459.202
0
7,35
972
1.063
1.615
18%
2014/15
255.181
0
5,66
749
1.999
3.160
4%
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