Tanzania: Export revenue from traditional crops dip, except coffee & sisal

Tanzania's traditional export revenue has faced a significant decline, according to the Bank of Tanzania's recent report ending in June 2021. The value of traditional exports dropped by 578 million US dollars compared to the previous year, except for two crops - coffee and sisal. This decline can largely be attributed to the global pandemic's impact on the export sector, leading to a drop in demand and disruptions in the supply chain. However, as the global economy begins to recover in 2021, there is a positive shift in the demand and prices of commodities, especially benefiting coffee and sisal exports. David Nyang, a Professor of Internal Development at Michigan University, shared insights on the recent trends in traditional exports from Tanzania and the implications for the African economy. Nyang highlighted the key role that agriculture plays in many African countries, including Tanzania, where a significant portion of the population relies on the agricultural sector for livelihoods. Despite the overall decline in export revenue, coffee and sisal have stood out with promising growth prospects. In 2018, Tanzania generated approximately $1 billion from agricultural exports. However, the onset of the pandemic in 2020 led to a decrease in revenue, with the total falling to just under $780 million. The demand for these products weakened during the pandemic, impacting the revenue generated. Nonetheless, 2021 has brought about positive changes for coffee and sisal, with increasing demand and favorable commodity prices. Coffee, in particular, faced challenges during the lockdowns in 2020, as retail outlets were closed, leading consumers to shift online for purchases. With the gradual reopening of retail and food service industries globally, the demand for coffee is rebounding swiftly. Factors such as supply chain disruptions, production challenges in countries like Vietnam, and frost incidents in Brazil have contributed to a surge in coffee prices. The Tanzanian economy has a strong reliance on export revenues, making the performance of traditional crops crucial for the country's fiscal stability. Nyang emphasized that the majority of the population in Tanzania is engaged in agriculture, highlighting the significance of agricultural commodities like coffee and sisal for millions of Tanzanians. The uptick in commodity prices and demand for coffee and sisal comes as a positive development for the country's economy, potentially easing the pressure on foreign reserves and strengthening the local currency. Tanzania's currency, the shilling, has shown signs of strengthening in the latter part of the year, correlating with the commodity price increases. The government of Tanzania has been proactive in diversifying production areas for coffee to mitigate the impact of climate change on traditional production regions. Efforts to increase coffee production from new areas, such as southern islands and the western part of the country, are underway to boost supply in the medium term. The Tanzania Coffee Board has set ambitious targets for coffee production this year, aiming to produce around 65,000 metric tons of coffee. To further enhance the export market for Tanzanian coffee, the country is looking to diversify its market reach beyond traditional European markets to target Asian markets. Additionally, Tanzania is focusing on niche markets, such as specialty coffee for chains like Starbucks, and the production of organic coffee to attract premium prices. By tapping into these markets, Tanzanian farmers stand to benefit from lucrative opportunities, ensuring a promising outlook for the country's coffee exports in the coming years.