Tanzania Daily News (Dar es Salaam)

25 August 2014

Tanzania: KNCU Diversifies Activities to Capture Competitive Market

Moshi — SEVERAL years after the Kilimanjaro Native Cooperative Union (KNCU) was established, few people would think of it the way it is today -- engaging in different ventures.

It was solely referred to as a local organisation that produces and exports Mild Arabica coffee, serving its owners, smallholder farmers on the slopes of Mount Kilimanjaro.

However, due to changes in coffee production, prices and general competition in the globalised world, KNCU could in no way resist what is contained in John Lily's book; 'Anatomy of Wilt' - where the English writer and poet quotes a Latin saying, 'Tempora mutantur, nos et mutamur in illis', that's 'Times change and we change with them.' So the Union that has come a long way since its inception in 1933 after the formation and the registration of the first eleven societies a year before, would carry on coffee-related activities until when 'the times' changed.

The first 11 primary cooperatives are Kibong'oto, Uru Central, Kilema, Kibosho Central, Kibosho East, Kibosho West, Machame Central, Mamba, Tarakea, Nkuu Rombo and Useri.

With ups and downs, including abolishment of co-operatives in 1976 and their reintroduction in 1984, it thus came up with a new name, KNCU (1984) Limited, with 90 affiliate societies, although few of them have since withdrawn under the auspices of trade liberalisation.

KNCU (1984) Limited Commercial Manager, Mr Godfrey Massawe, acknowledges that depending on coffee alone was dangerous; that's why the KNCU Board felt it needed something to add up to it, so that it could really hit the ground running. He says the trend in coffee business was unsatisfactory and this can be proved by looking at the past two decades.

"About 20 years ago KNCU used to buy 19,000 tons of coffee but in recent seasons, even in 2012/13, we got just about 1,400 tons. There is the problem of declining coffee prices in the world market," he says. The Union Board moved swiftly to mitigate the effects of falling coffee prices.

So, after changing with the 'changing of times' by investing in things like The Union Café - a coffee shop, The Coffee Tree Hotel, Kahawa Shamba - a tourism project as well as other community projects, the KNCU Board still thought of diversification.

Mr Massawe says the Union bought the idea of engaging in buying different crops. "The first idea was to engage in the banana and avocados procurement business but after evaluation, we found out that the business requires huge funding," he explains.

KNCU suspended the idea of buying the two crops and opted for maize, rice, sunflower and soya beans. "At a later stage KNCU would like to process sunflower seeds so that we sell the oil at an added value. As of now we resort to selling unprocessed sunflower," he says.

Mr Massawe says the board found out that it can hit the ground running by implementing the commercial initiative on the four products alongside coffee.

"This is the board's initiative, as it is now evident the Union cannot rely on coffee alone. Members accepted the idea during their 13th Annual General Meeting (AGM)," he adds.

He says KNCU is in advanced talks with Manyara cooperative societies for the purchase of rice from organised groups. The commercial manager says "we plan to trade them domestically as well as export some commodities depending on the market forces.

We want to negotiate with government so that we can also sell the crops to the State Grain Reserve (SGR)." KNCU boasts of storage facilities such as the underutilised Tanganyika Coffee Curing Co Ltd (TCCCo). According to Massawe, there are ongoing talks with a Chinese company, Guang Zhou Import & Export Company, for the sale of soya beans and coffee.

The two partners have found it necessary to engage in cultivation of the beans in a 300,000-hectare farm. Towards that end, KNCU is working with about three stakeholders -- the Government for acquisition of land, growers to carry on supplying the Union with quality soya beans and the Chinese company that will ultimately take consignment from time to time.

"We held talks with the Chinese officials who have now left for home and we will carry on the discussions with the Regional Commissioner's office. Ideally, the Chinese prefer mechanised farming rather than the beans grown as mixed crops with banana or other crops. We'll see what to do," he says.

The idea of KNCU working as an agent is not quite new, as some months ago the organisation discussed the matter with Tandahimba/Newala Cooperative Union (Tanecu) Limited to act as its agents on the cashew nut trade. Tanecu acts as a KNCU's agent in selling coffee in Mtwara Region, where the crop is in high demand.

Such multiple investments means that KNCU have taken the American business magnate, investor and philanthropist Mr Warren Buffet's words: "'Put all eggs in one basket, but watch that basket closely."

Tapping the full potentials, Mr Massawe says KNCU is waiting for the establishment of the Tanzania Commodity Exchange Market that will bring together buyers and sellers and be assured of quality, timely delivery and payment.

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