Inclusive Business Model Analysis: KPD, Tanzania

How a local Tanzanian coffee producer adapts its strategy to policy changes – the case of KPD.

Tanzanian Robusta coffee production volumes have been steadily growing over the past 30 years and currently represent about 45% of all coffee production. Most Robusta coffee is grown in Karagwe district near the borders with Uganda and Rwanda. KADERES Peasants Development Plc (KPD) has been sourcing coffee and providing services to 8,000 farmers in the region for over 10 years.

However, changes in government regulations require smallholders to be part of a cooperative to process and sell their coffee, thereby limiting companies in sourcing directly from farmers. This new policy has forced KPD to change its sourcing practices and phase out some of its processing activities. Previously being able to control the processing itself, KPD now must depend on the skills and capabilities of the still relatively young farmer cooperatives for the quality of its coffees, exported to mainly European markets.

Luckily there are also opportunities for KPD. Due to good agro-climatic conditions many farmers in the region are already growing a large variety of food crops such as maize, beans and cassava. These, and other agricultural products like honey and diary, are marked as high priority crops by the government of Tanzania in their national agriculture strategy. Regional demand, from institutional buyers such as the World Food Program, for these products is strong.

KPD – seeking to make the business less dependent on its coffee activities – is diversifying into these other product categories. With the support of AGRA they are developing sourcing and processing infrastructure for beans, maize and cassava with the aim to process up to a 50,000 MT of combined produce by 2022. At the same time, together with Mastercard, they are implementing the Farmer Network tool, collecting more granular data to improve effectiveness of services to farmers and ultimately connecting farmers to local banks for access to finance.