Coffee buying firm back in business after setbacks
What you need to know:
- After settling their legal issues, the company has made a comeback and is emerging as one of the top coffee buyers in the Kagera region.
Dar es Salaam. Tanzanian coffee company Karagwe Estate Limited has seen a remarkable transformation since its legal conflict with Touton AS, a French agro-trading multinational, was successfully resolved.
The parties were in dispute over a $2 million refinancing issue after a coffee supply contract was breached.
The company’s management concedes that the dispute settlement was a major step forward for Karagwe Estate, allowing them to regain focus on their core business.
Karagwe Estate finance manager Mr Justin Kamafa said after settling their legal issues, the company has made a comeback and is emerging as one of the top coffee buyers in the Kagera region.
“The legal issues were mainly because of the government’s move to stop private trading and initiate auctions, as well as the Covid-19 pandemic that impacted businesses and economies worldwide,”
“So, it was never our intention. Now we have made a comeback, and from an estimated 50, 000 metric tonnes of coffee that were put up for auction in the 2022/2023 season, we have traded near 15, 000 metric tonnes, close to 35 percent of the total volume,” said Mr Kamafa in an exclusive interview with The Citizen.
Karagwe and Kyerwa districts were the leading producing districts for coffee in the Kagera region.
In addition to this, they attribute part of the success to the auctioning system enforced by the Tanzanian government.
“The process has reduced costs and ensured the trustworthiness of the business, while the price cap had previously been set at around Sh1,600 a kilo, now, due to the auction, the price has improved to Sh2,030 a kilo,” he said.
“There is a lot of benefit to farmers as a result of this system. The market demand is also fast and improving,” he said.
According to the Tanzania Coffee Industry Development Strategy 2021, the auction system is believed to have multiple advantages, including better prices for the value chain as well as better control over exports.
Tanzania’s main Arabica coffee production (accounting for about 70 percent of the total) is concentrated in the regions of Kilimanjaro, Arusha, Mbeya, Songwe, and Ruvuma, with smaller volumes produced in the regions of Tanga, Iringa, Morogoro, Kigoma, Manyara, Geita, Mwanza, Katavi, Njombe, and Mara.
Robusta Coffee is mainly produced in the Kagera Region. Established in 1986, Karagwe Estates Limited deals with buying coffee from coffee farmers, processing it, and selling processed coffee to the external market.
It has been buying coffee from small farmers in villages and coffee unions and has become one of the key traders in the region.
