The Tanzania Coffee Curing Company (TCCCO) based in Moshi has been facing a debt totalling sh737,223,137.7 in operational cost caused by low amount of coffee processed as well as worn-out machinery with outdated technology.
The Deputy Minister for Agriculture, Food security and Cooperatives, Adam Malima told the National Assembly yesterday that the government has advised shareholders of the coffee industry on how the matter should be resolved. The consultation involves unions of smallholders on one hand and plantation owners on the other hand, to carry out evaluation for medium and long term strategic finance and investment after identifying the challenges and recommending remedies.
According to Malima the government expects to use that evaluation and recommendations from stakeholders to find a permanent solution including procurement of modern machinery at an affordable price. Costs will also be brought down by borrowing from banks or selling unused properties to obtain capital and generate income for payment of debts.
Malima also disclosed that a total of sh 1.3bn is required as capital for re-investment and sh 750m for paying debts.
“The stakeholders meeting held last year made some decisions on the way forward. The government received the report, and communications with banks and other financial institutions has been commenced for loans,” he said.
Owners of the coffee industry in Moshi are farmers associations with 69 percent and the Tanzania Coffee Growers Association (TCGA) holds 31 percent. The government has advised the farmers to find ways of purchasing more shares from TCGA and change the existing structure of ownership. The government will not object to any decisions reached, he stated.
The government continues to support productivity under farmers’ associations through the Cooperative Development Department, the deputy minister noted. It has responsibility to provide technical advice and inspection of farmers’ associations so as to improve productivity and conduct routine operations to ensure adhering to members’ interests.
Malima was responding to a basic question posed by Betty Machangu (Special Seats, CCM) who had disclosed that the coffee curing factory faces debts of Sh 700 million, thus it was deteriorating, impeding its capacity to process coffee.
She asked the government to explain what plans it has in place to salvage the industry which has worn out machinery which deters the industry’s development.
She said in a supplementary question that the coffee crop has been generating an income of sh 170bn to the Gross Domestic Product (GDP) but only 200,000 hectares out of 4.8m hectares of arable land for growing coffee have been utilized.
The government has strategic plans to improve the cash crop by creating an enabling environment for the private sector to invest in agro-processing in order to add value of the crops before exporting, and for local utilization, he stated.
He said currently about 2000 to 3000 tonnes of coffee are processed out of 50,000 tonnes produced.
Augustine Mrema (Vunjo, TLP) wanted to know if the government has compensated coffee farmers and other stakeholders including coffee companies and the Kilimanjaro Cooperative Union (KCU) following the worldwide economic crisis of 2008-2009.
Mrema also required the time frame that the government was planning to compensate coffee farmers and why it had isolated them.
He said KCU has a debt of 1.3bn and the government took a decision to compensate cotton and tobacco farmers and recently, Maasai livestock keepers and farmers whose livelihood was devastated by drought and famine causing deaths of cattle were compensated by the government to reduce the suffering arising from acute shortage of food.
The deputy minister promised to work on the question posed by Mrema and concurred with Zitto Kabwe (Kigoma North, Chadema) who sought to know the reason for transporting raw materials from Kigoma to Moshi so as to cure the coffee at the factory.
Kabwe said Kigoma coffee has scored the highest quality for three consecutive years in Sub Saharan countries, leading as the best selling in East Africa and Southern African countries.
Reacting, the minister said it was important to process the coffee crop in order to add value, noting though that government directives were infringed in transporting raw materials from one place to another.