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Why we’ll have to wait for a sip of Zambian coffee

Many poor countries are keen to diversify from just exporting primary products, as prices – especially for agricultural commodities – are often weak. But trade barriers can frustrate their efforts.

Willem Lublinkhof has taken to calls for specialty crops and value addition with great zeal, but it will be a while before his Munali Coffee makes it onto the menu at Starbucks or the shelves of Wal-Mart.

An hour-and-a-half from the Zambian capital Lusaka, towards the end of a lonely, narrow tar road, Lublinkhof's family-run Mubuyu Farms Ltd stands out like an oasis amongst the stark deprivation of its neighbours.

Here, at the foot of the famous Munali Hills where British explorer David Livingstone passed in the 19th century, Lublinkhof, Zambia's biggest coffee farmer, produces Munali Coffee, an elegantly packaged product that he hopes can chip away at trade barriers that continue to keep developing-country producers at bay.

The market for specialty coffees – made from exceptional beans grown only in ideal coffee-producing climates and unique soils producing distinctive flavours – has been growing worldwide at a rate faster than that of oversupplied, price-hit mainstream coffee, not only in the United States, but also in Britain, a traditionally tea sippers' country.

There is also a growing market in South Africa, currently estimated at 6,000 to 8,000 tons per year. According to Jesper Lublinkhof, Willem's son, Munali Coffee is an attempt to tap into that demand.

It is seen as a flagship venture in non-traditional exports by the Zambian government, which has also been pressing farmers to diversify from the traditional primary commodity exports. And without adding value to their produce, Agriculture Minister Mundia Sikatana says, less developed economies will remain "beggars".

"I have walked into supermarkets and seen mango juice made in Lebanon. They don't grow mangoes in Lebanon. They probably buy the mangoes from Africa, process them, and make juices which they sell back to us here at exorbitant prices," Sikatana said.

But as the Lublinkhofs have found out, for products made in poorer countries, efforts to add value do not necessarily guarantee access to international markets. Mubuyu Farms Ltd has been exploring markets for its coffee in Europe and the Southern Africa region, but high and escalating tariffs continue to stand in their way.

The issue of market access has led to some of the most acrimonious debates at the World Trade Organisation (WTO) in Geneva. But talks broke down on 24 July with little sign that the concerns of developing countries in this area would be dealt with.

A constant complaint has been that rich nations maintain high tariffs on agricultural products seen as 'sensitive' to competition from poor country exports, and that they slap heavier duties on goods at each stage of processing.

Developing countries argue that such 'tariff escalation' stops them from adding value to their products and breaking out of the centuries-old practice of shipping only primary commodities to wealthy nations – with the result that they cannot escape a cycle of poverty.

For the average developing-country coffee producer, it is cheaper to export raw coffee beans than ground coffee or roasted beans.

But, Jesper Lublinkhof claimed, the obstacles are not only in the West. "In South Africa, tariffs are high at 17 per cent. Apart from that, you have to apply for shelf-space at stores such as Pick 'n' Pay or Shoprite, and you have to pay listing fees, which can be significant. You will also be required to do merchandising on their shelves."

And so deep is the penetration of global brands that Munali Coffee cannot even make it onto the Zambia stores of Shoprite, the South African supermarket chain whose shelves are choking with global instant coffee brands such as Nescafe.

With the rules of international trade stacked against them, Teija Lublinkhof, Jesper's wife and a trained coffee maker, is trying to get Zambians, who are mostly tea drinkers, to try out specialty coffees. But she has not given up on trying to crack the world market – she targets world coffee fairs and tourists visiting Zambia.

The Lublinkofs say the Mubuyu Farms' production process is painstakingly meticulous and environmentally friendly – so that it can meet stringent European and US standards should greater opportunities arise.

Munali Coffee is also only the second African coffee producer after a Ugandan brand to be certified by Utz Kapeh for responsible coffee production – criteria include protection of labour rights, responsible use of agrichemicals, standards for efficient farm management and access to education and healthcare for employees.

The irony, say the Lublinkhofs, is that even with its imported packaging, aggressive marketing and modern production systems, Munali Coffee is still being beaten to potentially lucrative markets because of the absence of fair trading rules.

Whether or not the WTO talks resume, chances are the Lublinkhofs – as well as discerning consumers – will have to wait a while longer before having the satisfaction of seeing specialty Zambian coffee being served in the cafes of London and New York.

Rangarirai Mberi is senior business reporter at The Financial Gazette of Zimbabwe.

This is an edited version of an article, "Africa's value added dilemma", which first appeared in Zimbabwe's The Financial Gazette on 24 May 2006. The article is reproduced with its kind permission.

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08/08/2006

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