Dar Es Salaam — TANZANIA Coffee Board (TCB) will this year introduce an indicative price system to enable farmers fetch competitive prices and curb illegal smuggling of the cash crop to the neighbouring countries.

The move is also meant to increase government revenues through taxes, boost employment and provide reliable statistical data on coffee business in the country.

TCB chairman, Mr Pius Ngeze told reporters in Dar es Salaam, that coffee buyers were making huge profits in the world market at the expense of poor farmers by offering meagre prices.

"We are going to set an indicative price system which will be reviewed every month depending on price fluctuations in London and New York Markets," Mr Ngeze said when briefing journalists on his recent trip to the International Coffee Conference in Guatemala.

He said they were just waiting for the permission from the government so that they can introduce the system so that all buyers could buy around and above the indicative price.

The farm gate price (for raw coffee) stands at an average of 1,000/- per kilo while in the world market is 120 USD cents per pound.

Production of Coffee in Tanzania has increased from 51.438 tonnes of clean coffee for export in 2002/2003 to 68,300 tonnes in 2008/09 with several fluctuations in between.

The Chairman said Tanzania was losing a lot of money from illegal smuggling of the cash crop especially in Kagera Region whereby farmers go to sell their produce in Uganda.

"We do not have statistics but we know substantial amount of coffee is sold illegally in Uganda," he said adding that the acts were denying the government and cooperative societies revenues but also jeopardized jobs for locals.

Mr Ngeze acknowledged that farmers who sell in the black market were attracted by good prices and were discouraged by bureaucratic procedures in formal sales system advocated by TCB and cooperatives.

"We are working on the best sales model and one of them is introduction of indicative price system," he noted and added that the board was working on measures to curb illegal smuggling and collect data on how much coffee is smuggled.

Data shows that there has been a decline of coffee production in the world whereby demand has reached 132 million sacks while the supply is 128 million sacks.

In Africa too, production of coffee has dropped by 50 per cent from 20 million sacks 15 years a go to 10 million sacks. The continent contributes 12 per cent of all coffee in the world.

According to Mr Ngeze the Guatemala summit concurred that the fall in production of coffee was due to climatic change, soaring cost of inputs such as pesticides, falling prices which discourage farmers and scarce workforce.

He said the main target was to improve the quantity and quality of the crop, improve sensitization programme on Tanzania's coffee consumption habit and local processing of coffee to add value.

Only five per cent of Tanzanian coffee is consumed locally.