Despite the precipitous decline in coffee prices in early 2000, cash crop growing
smallholders in Kilimanjaro and Ruvuma, Tanzania, identified health shocks, droughts as
well as commodity price declines as their major risk factors. About one third of the rural
population in Kilimanjaro suffered either from drought or health shocks in 2003,
resulting in 18 percent welfare loss. Through reliance on savings and aid they reduced
this loss to 8 percent on average. In Ruvuma rainfall is more reliable and drought did not
affect welfare. Surprisingly, health shocks appeared not to affect welfare either, most
likely related to lower observed medical expenditures in case of illness given limited
access to health facilities. Coffee growers appeared not worse off in 2003 than non-coffee
growers, apart from the smallest ones in Kilimanjaro, whose consumption level was on
average 20 percent lower, and the largest ones in Ruvuma, whose consumption levels
appear larger. Interventions to improve health conditions and reduce the effect of
droughts emerge as important to reduce vulnerability in rural Tanzania.