Determinants of coffee exports in Tanzania

This study empirically examines the determinants of coffee exports in Tanzania for period of 1985 to 2010. The analysis uses co-integration analysis techniques. The empirical results show that all variables but one, have the hypothesized signs as expected by the theory. The key variables that include the real producer price received by the farmer (the ratio of the producer price to the domestic price index), average annual rainfall, deregulation of domestic and export marketing activities and abandonment of producer price fixing were found to be significant and related to the export supply of coffee in Tanzania. The study concludes that any attempt to improve the export supply of coffee should focus on letting farmers get satisfactory rewards for their efforts. This may involve restructuring the tax system which is still very oppressive, and leaves farmers with little to keep. Furthermore the government might consider continuing the liberalization of the coffee export sector. As the coffee sector gets completely liberalized and the constraints of the international markets are removed, prices will play a more important role.