ZAMBIAN COFFEE PRODUCTION: INFORMATION FOR THE U.S.

UNCLAS SECTION 01 OF 03 LUSAKA 001016 SIPDIS SIPDIS STATE FOR USITC (LSCHLITT AND FYINUG) E.O. 12958: N/A TAGS: OTRA ETRD ASEC ZA SUBJECT: ZAMBIAN COFFEE PRODUCTION: INFORMATION FOR THE U.S. INTERNATIONAL TRADE COMMISSION REF: A) SECSTATE 113452 B) LUSAKA 810 C) 06 LUSAKA 1421 ¶1. (U) This cable provides background information on Zambia's coffee industry, in response to Ref A action request to assist the U.S. International Trade Commission in the preparation of its annual reports. -------------- TEXTILES -------------- ¶2. (U) Please see previous reporting (Refs B and C) for information on Zambia's textile industry. -------------- COFFEE: STATISTICS -------------- ¶3. (U) Coffee Sector Details: Type of coffee produced: Arabica Main varieties grown: SL28, F6, and Catimor 129 Production cycle: 7-8 years Harvesting time (peak): June/July Method of processing: Wet processing Main export destination: Europe, U.S., and Japan ICO membership status: Exporting member ¶4. (U) Coffee Producing Areas (Cultivated Hectares): Southern Province: 975 hectares Lusaka Province: 350 hectares Central Province: 413 hectares Copperbelt Province: 250 hectares Northern and Luapula Provinces: 1,555 hectares -------------- Total 3,543 hectares (Note: This total reflects both mature and immature coffee fields.) ¶5. (U) Coffee Production and Exports (in metric tons): Crop Year April-March Production Qty Exported -------------- -------------- -------------- 1984/85 397 377 1985/86 618 598 1986/87 515 499 1987/88 450 432 1988/89 260 244 1989/90 1,313 1,294 1990/91 1,329 1,309 1991/92 1,792 1,772 1992/93 1,531 1,514 1993/94 1,582 1,536 1994/95 1,232 1,196 1995/96 1,580 1,544 1996/97 2,167 1,844 1997/98 2,627 2,285 1998/99 3,450 3,358 1999/00 2,200 2,180 2000/01 5,868 5,832 2001/02 5,000 4,531 2002/03 6,500 6,036 2003/04 6,500 5,811 2004/05 6,800 6,585 2005/06 6,500 6,017 (Source for data in paragraphs 3 through 5: Zambia Coffee Growers' Association) -------------- COFFEE: GENERAL BACKGROUND -------------- ¶6. (U) Zambia is well-suited for irrigated coffee production, with favorable climatic conditions and abundant land resources. Low international prices, however, have discouraged commercial farmers from diversifying into coffee production. Other factors that restrain production levels are the strong Zambian Kwacha and high interest rates (making it difficult for farmers to expand or purchase equipment/machinery). According to the Coffee Board of Zambia, the sector is also held up by international trade barriers and insufficient resources to promote Zambian coffee abroad. LUSAKA 00001016 002 OF 003 ¶7. (U) Total national production in the 2005/2006 crop year was approximately 6,500 metric tons. The 2006/2007 figure is not yet available, but the Coffee Board of Zambia estimates that exports for the period may have fallen to approximately 4,500 metric tons. This represents a significant decline from previous years, due in part to a drought in 2005. Some farmers have also experienced difficulties recovering their operating costs and have uprooted their coffee crops. ¶8. (U) Nevertheless, the Zambia Coffee Growers Association anticipates that this figure will rebound, rising to 10,000 metric tons by 2010, based on recent plantings and the Zambia Coffee Growers' Association's ambitious plans to expand out-grower schemes with small-scale farmers. A Coffee Board of Zambia representative told Emboff that the industry's target is between 15 to 20 thousand metric tons per year, in the specialty segment. ¶9. (U) A majority of the coffee exports head to European markets, primarily Germany, the UK, Switzerland, and the Netherlands. The remaining export markets include South Africa, Australia, Japan, and the U.S. Local sales of roasted coffee account for less than 10 percent of total Zambian coffee production. Terranova Coffee Estates of Mazabuka has become the newest addition to Starbuck's line of high-end "Black Apron" coffees. In 2006, Terranova sold 108 tons of coffee to Starbucks. Colin Street, the owner of Terranova Farm, stated that without USAID assistance, his coffee would never have reached high-value markets such as Starbucks. -------------- COFFEE: PRODUCTION -------------- ¶10. (U) Zambia produces Arabica coffee from plant seedlings that are raised in on-farm nurseries. The coffee consists of two categories, conventional varieties and semi-dwarf varieties, and is harvested between March and July. The freshly picked coffee cherries (red-hulled beans) are mechanically hulled, washed and sun-dried on wire mesh trays. Many of the farmers endeavor to apply progressive agronomic techniques, including prudent water usage, crop protection and nutrition, "fertigation" (fertilizer in irrigation water) composting of coffee pulp, biological pest control, and the promotion of biodiversity. ¶11. (U) Large scale producers benefit from GRZ agricultural incentives, such as VAT rebates, capital equipment purchase discounts, and electrical rate reductions. Small-scale farmers or outgrowers who do not register as agricultural enterprises are not eligible to benefit from the agricultural incentives. Commercial borrowing is not easily or widely available. Some banks have begun to introduce agricultural loans, although the rates are not yet competitive. ¶12. (U) The coffee sector provides employment to more than 2,100 permanent staff. Seasonal employment during the harvest season provides a further 18,000 jobs. There are approximately 75 large-scale and 520 small-scale farmers who grow coffee in Zambia. -------------- COFFEE: INDUSTRY INSTITUTIONS -------------- ¶13. (U) The coffee industry is relatively well-organized in Zambia, with functioning structures and institutions to support its growth. The Coffee Board of Zambia, a statutory government agency, is the primary regulatory body. The Board oversees the growth of the coffee sector, ensures the equitable distribution of GRZ resources to small- and large-scale commercial farmers alike, and markets Zambia's coffee brand/image oversees. ¶14. (U) The Zambia Coffee Growers' Association (ZCGA) is the operating wing of the Coffee Board, which provides coffee extension services and ensures quality control. It also provides administrative, milling, warehousing, and shipping services to its members and has the sole responsibility for export sales. ZCGA members who meet certain criteria may conduct their own independent marketing; however the ZCGA handles the logistics for all exported products. The ZCGA is wholly owned and funded by its members (coffee growers). -------------- COFFEE: USAID ASSISTANCE -------------- ¶15. (U) USAID/Zambia has worked closely with ZCGA and the Zambia Coffee Board to facilitate the country's membership in the Eastern African Fine Coffees Association. This has resulted in increased exposure to international markets and has lead to higher quality and, consequently, higher prices for Zambian coffee. USAID has supported the attendance of coffee producers to industry trade shows LUSAKA 00001016 003 OF 003 in the United States, Europe, and Japan. USAID has also furnished expert technical assistance in production and processing technologies, tasting, coffee preparation and marketing. As a result of U.S. assistance, Zambian coffee growers have recorded significant growth in sales to these specialty markets. -------------- COFFEE: CONTACTS -------------- Mr. Andrew Hamaamba, Board Chairman, Coffee Board of Zambia, P.O. Box 90794, Lusaka. Tel/Fax: 260-21-125 2850; Email: coffee@iwayafrica.com Mr. Ben Zimba, Board Secretary, Coffee Board of Zambia, P.O. Box 90794, Lusaka. Tel/Fax: 260-21-125 2850; Email: coffee@iwayafrica.com Mr. Joseph Taguma, General Manager, Zambia Coffee Growers Associations, Plot 7138, Mwembeshi Road, P.O. Box 35388, Lusaka. Tel: 260-21-128 6447; 260-21-128 6972; Fax: 260-21-128 7654; Email: jtaguma@zcga.co.zm and zcga@zcga.co.zm Mr. Collin Street, Terranova Farms limited, P.O. Box 670128, Mazabuka. Tel/Fax: 260-21-323 0365; mobile: 260-97-779 4423 Mr. Willeim Lublinkhof, Mubuyu Farms Limited, P.O. Box 33063, Lusaka. Tel/Fax: 260-21-125 4141; mobile: 260-97-777 0278 Mr. H. Von Pezold, Kasama Coffee Company, P.O. Box 410208, Kasama. Tel: 260-21-422 1591; Fax: 260-21-122 1887 Dr. Stephen Muliokela, Director, Golden Valley Agricultural Research Trust, P.O. Box RW 50834, Lusaka. Tel: 260-21-121 3739; Fax: 260-21-121 3832; Email: gart@zamnet.zm Mr. Likando Mukumbuta, Executive Director, ZATAC Limited, Private Bag 207, Woodlands, 191A Chindo Road, Lusaka. Tel: 260-21-126 3512; Fax: 260-21-126 3502 -------------- QBASSY POC -------------- The primary contact person for Embassy Lusaka is: Name: Mikael Cleverley Title: Political/Economic Officer Email: CleverleyMX@state.gov Phone: +260-1-250-955 Fax: +260-1-252-225 MARTINEZ