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Home Field Trips Rural Life and Agriculture Tour Coffee Production in Zambia

Terranova Estate

Coffee Production in Zambia

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Although the Terranova Estate grows a range of other cash crops its coffee crop is an important revenue earner for the farm. Let us first consider the production of coffee- a product that many of you drink and take for granted. People in Zambia drink little coffee. It is a crop grown because of its high export potential.

Coffee production is most suited to areas with high rainfall and high altitude and thus coffee production is located in the northern part of Zambia. Zambia coffee made from Arabica beans is of a very high quality so there is a high demand for Zambian beans. Indeed the supply of beans does not match the demand.

Compared to the world supply the output of Zambian coffee is very low and too small to sell to major world buyers. However the owners of the Terranova farm have engaged in successful niche marketing. Globally the overall demand for coffee has grown slowly due to:

• a low income elasticity of demand and
• an increase in the number of non coffee based substitutes

Coffee Production in Zambia

However, the top end of the coffee market such as gourmet coffees are growing more quickly. Terranova has aimed at this segment of the market and through successful marketing their high quality bean, under the brand name of Terranova, their sales to the USA have grown. The owners of the farm fully recognise the importance of financial support they have been given by organisation such as the European Investment Bank and the World Bank. Both have provided low interest long-term loans for more advanced irrigation systems. The European Union's Export Development Programme has also offered them short-term finance to allow them to buy some capital items and technical advice.

The also recognise the role of the government in liberalisation and allowing producers to keep foreign exchange earnings which can be re-invested into the business.

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Related Glossary Items:
Niche marketing
Liberalisation
World Bank
European Investment Bank
Income elasticity of demand

Related Theories:
Economies of scale and commercial farming
The coffee market
Income elasticity of demand