Company hails new coffee auction system

KARAGWE Estate Limited, Tanzanian coffee company, has lauded the government’s decision of giving the Tanzania Coffee Board (TCB) the mandate to supervise coffee auctions, something which has made the firm bounce back after financial difficulties.

Speaking to the ‘Daily News’ in an exclusive interview, the company’s Finance Manager Justin Kamafa said purchasing coffee through the auction system made the firm to bounce back and emerge one of the top coffee buyers in Kagera Region.

“Now we have made a comeback, and from an estimated 50, 000 metric tonnes of coffee that were put up for auction in the 2022/23 season we traded nearly 15, 000 metric tonnes, close to 35 per cent of the total auctioned coffee,” he added.

According to Mr Kamafa, after the TCB assumed the responsibility, coffee price also increased to 2,030/- per kilogramme.

He said the process has reduced the cost and ensured the trustworthiness of the business.

“While the price cap had previously been set at around 1,600/- per kilogramme, due to the auction, the price has improved to 2,030/- per kg,” he said.

According to the Tanzania Coffee Industry Development Strategy 2021, the auction system is believed to have multiple advantages, including better prices and control over exports.

In particular, he said, before TCB was given the mandate to supervise the auction, the cooperative unions were the ones that performed the function, something which denied companies access to buying coffee.

The previous arrangement denied the company an opportunity to supply coffee to Touton AS, a French agro-trading multinational, hence attracting legal conflict.

“The legal issues resulted from the government’s decision to stop private companies from buying coffee directly from farmers, as well as the effects of Covid-19 pandemic which impacted businesses and economies worldwide,” Mr Kamafa said.

Karagwe Estate and Touton were embroiled in dispute of  over 2 million US dollars refinancing after a coffee supply contract was breached.

According to him the legal conflict was, however, successfully resolved.

He noted that the dispute settlement was a major step forward for Karagwe Estate, allowing them to resume their business.

According to the report unveiled by TCB on Tanzania Coffee Industry Development Strategy 2011-2021, coffee is one of Tanzania’s primary agricultural export commodities, accounting for about 5 per cent of total export value, and generating export earnings averaging 100 million US dollars per annum over the last 30 years.

The industry provides direct income to more than 400,000 farmer households thus supporting the livelihoods of an estimated 2.4 million individuals.

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