Impacts of coffee price volatility on the livelihoods of smallholder farmers in Karagwe District, Tanzania

Résumé

Coffee is one of the most well-known potential cash crops, serving as the primary source of income for millions of farmers in various countries worldwide. Despite its significance in generating income and employment for many, its price remains unpredictable. This study aimed to assess the impacts of coffee price fluctuations on the livelihoods of smallholder farmers in Karagwe District. The study adopted the market-orientated agriculture theory. The theory posits that market-oriented agricultural production stimulates broader economic growth through linkages that encourage farmers to shift from subsistence farming to commercial-oriented farming. This aligns with the study, as most farmers in the study area have been involved in coffee production as a major cash crop, making competition in the coffee market both locally and internationally intense. A cross-sectional design and a mixed approach were used to achieve the study objectives. Data were collected from a sample of 90 smallholder farmers, representing 10% of the targeted population of coffee farmers registered with the Karagwe District Cooperative Union (KDCU Ltd), and from all six Agricultural Marketing Cooperative Societies (AMCOS) sampled to meet the study’s requirements. Furthermore, 15 key informants from all six AMCOS and KDCU Ltd were also interviewed using a checklist of predetermined questions. Descriptive statistics and a multiple linear regression model were used to evaluate how coffee price volatility affects rural livelihoods. The findings indicated that the socio-economic stability of farmers in Karagwe District who live in rural areas is negatively impacted by unstable coffee prices at the 5% significance level. The study concludes that the persistence of price instability in coffee has forced the decline in family income of smallholder farmers, which consequently prevents them from meeting life's necessities, leading to the deterrence of their livelihoods' sustainability. Therefore, it is recommended that the government, along with other agricultural stakeholders and cooperatives, should strengthen regulation of the coffee trade both locally and internationally, offer financial assistance with simple credit terms, and provide relevant financial and agricultural education to farmers, which may act as a coping mechanism for any kind of price volatility.